Correlation Between Gold Road and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Gold Road and Falcon Metals 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 Falcon Metals 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 Falcon Metals, you can compare the effects of market volatilities on Gold Road and Falcon Metals 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Falcon Metals.
Diversification Opportunities for Gold Road and Falcon Metals
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gold and Falcon is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Gold Road i.e., Gold Road and Falcon Metals go up and down completely randomly.
Pair Corralation between Gold Road and Falcon Metals
Assuming the 90 days trading horizon Gold Road Resources is expected to generate 0.6 times more return on investment than Falcon Metals. However, Gold Road Resources is 1.65 times less risky than Falcon Metals. It trades about 0.35 of its potential returns per unit of risk. Falcon Metals is currently generating about 0.02 per unit of risk. If you would invest 177.00 in Gold Road Resources on September 13, 2024 and sell it today you would earn a total of 38.00 from holding Gold Road Resources or generate 21.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Falcon Metals
Performance |
| Timeline |
| Gold Road Resources |
| Falcon Metals |
Gold Road and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Falcon Metals
The main advantage of trading using opposite Gold Road and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| Gold Road vs. Ras Technology Holdings | Gold Road vs. Srj Technologies Group | Gold Road vs. Richmond Vanadium Technology | Gold Road vs. G8 Education |
| Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Bluescope Steel | Falcon Metals vs. Sandfire Resources NL |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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