Correlation Between Golden Metal and Rockfire Resources
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Rockfire Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Golden Metal and Rockfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and Rockfire Resources plc, you can compare the effects of market volatilities on Golden Metal and Rockfire Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Golden Metal with a short position of Rockfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Rockfire Resources.
Diversification Opportunities for Golden Metal and Rockfire Resources
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Golden and Rockfire is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Rockfire Resources plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfire Resources plc and Golden Metal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Golden Metal Resources are associated (or correlated) with Rockfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfire Resources plc has no effect on the direction of Golden Metal i.e., Golden Metal and Rockfire Resources go up and down completely randomly.
Pair Corralation between Golden Metal and Rockfire Resources
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 0.76 times more return on investment than Rockfire Resources. However, Golden Metal Resources is 1.31 times less risky than Rockfire Resources. It trades about 0.1 of its potential returns per unit of risk. Rockfire Resources plc is currently generating about -0.03 per unit of risk. If you would invest 813.00 in Golden Metal Resources on August 31, 2024 and sell it today you would earn a total of 2,237 from holding Golden Metal Resources or generate 275.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.15% |
| Values | Daily Returns |
Golden Metal Resources vs. Rockfire Resources plc
Performance |
| Timeline |
| Golden Metal Resources |
| Rockfire Resources plc |
Golden Metal and Rockfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Rockfire Resources
The main advantage of trading using opposite Golden Metal and Rockfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Rockfire Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rockfire Resources will offset losses from the drop in Rockfire Resources' long position.| Golden Metal vs. Bankers Investment Trust | Golden Metal vs. Oakley Capital Investments | Golden Metal vs. Federal Realty Investment | Golden Metal vs. New Residential Investment |
| Rockfire Resources vs. Charter Communications Cl | Rockfire Resources vs. Creo Medical Group | Rockfire Resources vs. Verizon Communications | Rockfire Resources vs. Futura Medical |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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