Correlation Between Gold Road and Green Technology
Can any of the company-specific risk be diversified away by investing in both Gold Road and Green Technology 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 Green Technology 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 Green Technology Metals, you can compare the effects of market volatilities on Gold Road and Green Technology 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 Green Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Green Technology.
Diversification Opportunities for Gold Road and Green Technology
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and Green is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Green Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Technology 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 Green Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Technology Metals has no effect on the direction of Gold Road i.e., Gold Road and Green Technology go up and down completely randomly.
Pair Corralation between Gold Road and Green Technology
Assuming the 90 days trading horizon Gold Road Resources is expected to generate 0.45 times more return on investment than Green Technology. However, Gold Road Resources is 2.2 times less risky than Green Technology. It trades about -0.12 of its potential returns per unit of risk. Green Technology Metals is currently generating about -0.32 per unit of risk. If you would invest 200.00 in Gold Road Resources on September 1, 2024 and sell it today you would lose (13.00) from holding Gold Road Resources or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Green Technology Metals
Performance |
| Timeline |
| Gold Road Resources |
| Green Technology Metals |
Gold Road and Green Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Green Technology
The main advantage of trading using opposite Gold Road and Green Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Green Technology 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 Green Technology will offset losses from the drop in Green Technology'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 |
| Green Technology vs. Northern Star Resources | Green Technology vs. Evolution Mining | Green Technology vs. Bluescope Steel | Green Technology 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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