Correlation Between Gold Road and Carlton Investments
Can any of the company-specific risk be diversified away by investing in both Gold Road and Carlton Investments 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 Carlton Investments 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 Carlton Investments, you can compare the effects of market volatilities on Gold Road and Carlton Investments 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 Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Carlton Investments.
Diversification Opportunities for Gold Road and Carlton Investments
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gold and Carlton is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments 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 Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Gold Road i.e., Gold Road and Carlton Investments go up and down completely randomly.
Pair Corralation between Gold Road and Carlton Investments
Assuming the 90 days trading horizon Gold Road Resources is expected to under-perform the Carlton Investments. In addition to that, Gold Road is 2.65 times more volatile than Carlton Investments. It trades about -0.04 of its total potential returns per unit of risk. Carlton Investments is currently generating about 0.07 per unit of volatility. If you would invest 3,010 in Carlton Investments on August 28, 2024 and sell it today you would earn a total of 40.00 from holding Carlton Investments or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Carlton Investments
Performance |
| Timeline |
| Gold Road Resources |
| Carlton Investments |
Gold Road and Carlton Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Carlton Investments
The main advantage of trading using opposite Gold Road and Carlton Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Carlton Investments 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 Carlton Investments will offset losses from the drop in Carlton Investments' long position.| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
| Carlton Investments vs. Australian Foundation Investment | Carlton Investments vs. GQG Partners DRC | Carlton Investments vs. Metrics Master Income | Carlton Investments vs. L1 Long Short |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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