Correlation Between Gold Road and Tombador Iron
Can any of the company-specific risk be diversified away by investing in both Gold Road and Tombador Iron 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 Tombador Iron 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 Tombador Iron, you can compare the effects of market volatilities on Gold Road and Tombador Iron 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 Tombador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Tombador Iron.
Diversification Opportunities for Gold Road and Tombador Iron
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gold and Tombador is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Tombador Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tombador Iron 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 Tombador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tombador Iron has no effect on the direction of Gold Road i.e., Gold Road and Tombador Iron go up and down completely randomly.
Pair Corralation between Gold Road and Tombador Iron
Assuming the 90 days trading horizon Gold Road is expected to generate 60.75 times less return on investment than Tombador Iron. But when comparing it to its historical volatility, Gold Road Resources is 42.87 times less risky than Tombador Iron. It trades about 0.06 of its potential returns per unit of risk. Tombador Iron is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.40 in Tombador Iron on September 2, 2024 and sell it today you would earn a total of 33.60 from holding Tombador Iron or generate 2400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Tombador Iron
Performance |
| Timeline |
| Gold Road Resources |
| Tombador Iron |
Gold Road and Tombador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Tombador Iron
The main advantage of trading using opposite Gold Road and Tombador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Tombador Iron 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 Tombador Iron will offset losses from the drop in Tombador Iron's long position.| Gold Road vs. Carlton Investments | Gold Road vs. Queste Communications | Gold Road vs. Flagship Investments | Gold Road vs. Qbe Insurance Group |
| Tombador Iron vs. Northern Star Resources | Tombador Iron vs. Evolution Mining | Tombador Iron vs. Sandfire Resources NL | Tombador Iron vs. Aneka Tambang Tbk |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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