Correlation Between Gold Road and Autosports
Can any of the company-specific risk be diversified away by investing in both Gold Road and Autosports 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 Road and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Autosports Group, you can compare the effects of market volatilities on Gold Road and Autosports 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 Road with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Autosports.
Diversification Opportunities for Gold Road and Autosports
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Autosports is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Gold Road 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 Gold Road Resources are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Gold Road i.e., Gold Road and Autosports go up and down completely randomly.
Pair Corralation between Gold Road and Autosports
Assuming the 90 days trading horizon Gold Road Resources is expected to generate 1.08 times more return on investment than Autosports. However, Gold Road is 1.08 times more volatile than Autosports Group. It trades about 0.07 of its potential returns per unit of risk. Autosports Group is currently generating about -0.04 per unit of risk. If you would invest 160.00 in Gold Road Resources on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Gold Road Resources or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Autosports Group
Performance |
| Timeline |
| Gold Road Resources |
| Autosports Group |
Gold Road and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Autosports
The main advantage of trading using opposite Gold Road and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
| Autosports vs. Summit Resources Limited | Autosports vs. iShares Global Healthcare | Autosports vs. Australian Dairy Farms | Autosports vs. Adriatic Metals Plc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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