Correlation Between Rockhaven Resources and Golden Arrow
Can any of the company-specific risk be diversified away by investing in both Rockhaven Resources and Golden Arrow 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 Rockhaven Resources and Golden Arrow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockhaven Resources and Golden Arrow Resources, you can compare the effects of market volatilities on Rockhaven Resources and Golden Arrow 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 Rockhaven Resources with a short position of Golden Arrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockhaven Resources and Golden Arrow.
Diversification Opportunities for Rockhaven Resources and Golden Arrow
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rockhaven and Golden is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Rockhaven Resources and Golden Arrow Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Arrow Resources and Rockhaven 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 Rockhaven Resources are associated (or correlated) with Golden Arrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Arrow Resources has no effect on the direction of Rockhaven Resources i.e., Rockhaven Resources and Golden Arrow go up and down completely randomly.
Pair Corralation between Rockhaven Resources and Golden Arrow
Given the investment horizon of 90 days Rockhaven Resources is expected to generate 0.89 times more return on investment than Golden Arrow. However, Rockhaven Resources is 1.12 times less risky than Golden Arrow. It trades about 0.08 of its potential returns per unit of risk. Golden Arrow Resources is currently generating about 0.01 per unit of risk. If you would invest 6.00 in Rockhaven Resources on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Rockhaven Resources or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockhaven Resources vs. Golden Arrow Resources
Performance |
| Timeline |
| Rockhaven Resources |
| Golden Arrow Resources |
Rockhaven Resources and Golden Arrow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockhaven Resources and Golden Arrow
The main advantage of trading using opposite Rockhaven Resources and Golden Arrow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockhaven Resources position performs unexpectedly, Golden Arrow 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 Golden Arrow will offset losses from the drop in Golden Arrow's long position.| Rockhaven Resources vs. Algoma Steel Group | Rockhaven Resources vs. Champion Iron | Rockhaven Resources vs. International Zeolite Corp | Rockhaven Resources vs. European Residential Real |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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