Correlation Between Gold Road and EROAD
Can any of the company-specific risk be diversified away by investing in both Gold Road and EROAD 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 EROAD 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 EROAD, you can compare the effects of market volatilities on Gold Road and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and EROAD.
Diversification Opportunities for Gold Road and EROAD
Pay attention - limited upside
The 3 months correlation between Gold and EROAD is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Gold Road i.e., Gold Road and EROAD go up and down completely randomly.
Pair Corralation between Gold Road and EROAD
Assuming the 90 days trading horizon Gold Road Resources is expected to under-perform the EROAD. In addition to that, Gold Road is 1.15 times more volatile than EROAD. It trades about -0.04 of its total potential returns per unit of risk. EROAD is currently generating about 0.14 per unit of volatility. If you would invest 79.00 in EROAD on August 28, 2024 and sell it today you would earn a total of 5.00 from holding EROAD or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. EROAD
Performance |
| Timeline |
| Gold Road Resources |
| EROAD |
Gold Road and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and EROAD
The main advantage of trading using opposite Gold Road and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
| EROAD vs. Navigator Global Investments | EROAD vs. Super Retail Group | EROAD vs. Regal Investment | EROAD vs. Australian United Investment |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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