Correlation Between Galway Metals and Rockhaven Resources
Can any of the company-specific risk be diversified away by investing in both Galway Metals and Rockhaven Resources 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 Galway Metals and Rockhaven Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galway Metals and Rockhaven Resources, you can compare the effects of market volatilities on Galway Metals and Rockhaven Resources 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 Galway Metals with a short position of Rockhaven Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galway Metals and Rockhaven Resources.
Diversification Opportunities for Galway Metals and Rockhaven Resources
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Galway and Rockhaven is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Galway Metals and Rockhaven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockhaven Resources and Galway Metals 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 Galway Metals are associated (or correlated) with Rockhaven Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockhaven Resources has no effect on the direction of Galway Metals i.e., Galway Metals and Rockhaven Resources go up and down completely randomly.
Pair Corralation between Galway Metals and Rockhaven Resources
Assuming the 90 days horizon Galway Metals is expected to generate 5.67 times less return on investment than Rockhaven Resources. But when comparing it to its historical volatility, Galway Metals is 1.41 times less risky than Rockhaven Resources. It trades about 0.01 of its potential returns per unit of risk. Rockhaven Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Rockhaven Resources on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Rockhaven Resources or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galway Metals vs. Rockhaven Resources
Performance |
| Timeline |
| Galway Metals |
| Rockhaven Resources |
Galway Metals and Rockhaven Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galway Metals and Rockhaven Resources
The main advantage of trading using opposite Galway Metals and Rockhaven Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galway Metals position performs unexpectedly, Rockhaven Resources 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 Rockhaven Resources will offset losses from the drop in Rockhaven Resources' long position.| Galway Metals vs. First Majestic Silver | Galway Metals vs. Ivanhoe Energy | Galway Metals vs. Orezone Gold Corp | Galway Metals vs. Faraday Copper Corp |
| Rockhaven Resources vs. First Majestic Silver | Rockhaven Resources vs. Ivanhoe Energy | Rockhaven Resources vs. Orezone Gold Corp | Rockhaven Resources vs. Faraday Copper Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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