Correlation Between Gold Bond and Aspen
Can any of the company-specific risk be diversified away by investing in both Gold Bond and Aspen 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 Gold Bond and Aspen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gold Bond and Aspen Group, you can compare the effects of market volatilities on Gold Bond and Aspen 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 Gold Bond with a short position of Aspen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bond and Aspen.
Diversification Opportunities for Gold Bond and Aspen
Poor diversification
The 3 months correlation between Gold and Aspen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bond and Aspen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Group and Gold Bond 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 The Gold Bond are associated (or correlated) with Aspen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Group has no effect on the direction of Gold Bond i.e., Gold Bond and Aspen go up and down completely randomly.
Pair Corralation between Gold Bond and Aspen
Assuming the 90 days trading horizon Gold Bond is expected to generate 2.68 times less return on investment than Aspen. But when comparing it to its historical volatility, The Gold Bond is 1.76 times less risky than Aspen. It trades about 0.24 of its potential returns per unit of risk. Aspen Group is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 57,260 in Aspen Group on September 1, 2024 and sell it today you would earn a total of 10,720 from holding Aspen Group or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gold Bond vs. Aspen Group
Performance |
| Timeline |
| Gold Bond |
| Aspen Group |
Gold Bond and Aspen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bond and Aspen
The main advantage of trading using opposite Gold Bond and Aspen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bond position performs unexpectedly, Aspen 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 Aspen will offset losses from the drop in Aspen's long position.| Gold Bond vs. Big Shopping Centers | Gold Bond vs. Al Bad Massuot Yitzhak | Gold Bond vs. Harel Insurance Investments | Gold Bond vs. Palram |
| Aspen vs. Rapac Communication Infrastructure | Aspen vs. Polyram Plastic Industries | Aspen vs. Israel China Biotechnology | Aspen vs. One Software Technologies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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