Correlation Between Gold Road and Global Health
Can any of the company-specific risk be diversified away by investing in both Gold Road and Global Health 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 Global Health 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 Global Health, you can compare the effects of market volatilities on Gold Road and Global Health 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 Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Global Health.
Diversification Opportunities for Gold Road and Global Health
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health 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 Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Gold Road i.e., Gold Road and Global Health go up and down completely randomly.
Pair Corralation between Gold Road and Global Health
Assuming the 90 days trading horizon Gold Road is expected to generate 1.77 times less return on investment than Global Health. But when comparing it to its historical volatility, Gold Road Resources is 2.37 times less risky than Global Health. It trades about 0.06 of its potential returns per unit of risk. Global Health is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Global Health on August 26, 2024 and sell it today you would earn a total of 2.00 from holding Global Health or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Global Health
Performance |
| Timeline |
| Gold Road Resources |
| Global Health |
Gold Road and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Global Health
The main advantage of trading using opposite Gold Road and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Global Health 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 Global Health will offset losses from the drop in Global Health'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 |
| Global Health vs. Andean Silver Limited | Global Health vs. National Storage REIT | Global Health vs. Dicker Data | Global Health vs. Platinum Asset Management |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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