Correlation Between Gossan Resources and Metro AG
Can any of the company-specific risk be diversified away by investing in both Gossan Resources and Metro AG 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 Gossan Resources and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gossan Resources and Metro AG, you can compare the effects of market volatilities on Gossan Resources and Metro AG 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 Gossan Resources with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gossan Resources and Metro AG.
Diversification Opportunities for Gossan Resources and Metro AG
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gossan and Metro is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gossan Resources and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and Gossan Resources 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 Gossan Resources are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Gossan Resources i.e., Gossan Resources and Metro AG go up and down completely randomly.
Pair Corralation between Gossan Resources and Metro AG
Assuming the 90 days horizon Gossan Resources is expected to generate 0.81 times more return on investment than Metro AG. However, Gossan Resources is 1.24 times less risky than Metro AG. It trades about 0.31 of its potential returns per unit of risk. Metro AG is currently generating about -0.17 per unit of risk. If you would invest 1.00 in Gossan Resources on September 19, 2024 and sell it today you would earn a total of 0.10 from holding Gossan Resources or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gossan Resources vs. Metro AG
Performance |
| Timeline |
| Gossan Resources |
| Metro AG |
Gossan Resources and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gossan Resources and Metro AG
The main advantage of trading using opposite Gossan Resources and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gossan Resources position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Gossan Resources vs. BHP Group Limited | Gossan Resources vs. Vale SA | Gossan Resources vs. Superior Plus Corp | Gossan Resources vs. SIVERS SEMICONDUCTORS AB |
| Metro AG vs. Metro AG | Metro AG vs. Superior Plus Corp | Metro AG vs. SIVERS SEMICONDUCTORS AB | Metro AG vs. NorAm Drilling AS |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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