Correlation Between American Sierra and Goff Corp

Can any of the company-specific risk be diversified away by investing in both American Sierra and Goff Corp 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 American Sierra and Goff Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Sierra Gold and Goff Corp, you can compare the effects of market volatilities on American Sierra and Goff Corp 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 American Sierra with a short position of Goff Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Sierra and Goff Corp.

Diversification Opportunities for American Sierra and Goff Corp

0.26

Correlation Coefficient

American Sierra  Goff Corp

Modest diversification

The 3 months correlation between American and Goff is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding American Sierra Gold and Goff Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goff Corp and American Sierra 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 American Sierra Gold are associated (or correlated) with Goff Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goff Corp has no effect on the direction of American Sierra i.e., American Sierra and Goff Corp go up and down completely randomly.

Pair Corralation between American Sierra and Goff Corp

Given the investment horizon of 90 days American Sierra is expected to generate 1.67 times less return on investment than Goff Corp. But when comparing it to its historical volatility, American Sierra Gold is 1.69 times less risky than Goff Corp. It trades about 0.12 of its potential returns per unit of risk. Goff Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.25  in Goff Corp on October 5, 2024 and sell it today you would earn a total of  0.91  from holding Goff Corp or generate 72.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Sierra Gold  vs.  Goff Corp

American Sierra Gold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Sierra Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, American Sierra reported solid returns over the last few months and may actually be approaching a breakup point.

Goff Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goff Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Goff Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Sierra and Goff Corp

The main advantage of trading using opposite American Sierra and Goff Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Sierra position performs unexpectedly, Goff Corp 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 Goff Corp will offset losses from the drop in Goff Corp's long position.

The idea behind American Sierra Gold and Goff Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.