Correlation Between Applied Digital and Gold Bull

Can any of the company-specific risk be diversified away by investing in both Applied Digital and Gold Bull 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 Applied Digital and Gold Bull into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Applied Digital and Gold Bull

-0.17

Correlation Coefficient

Applied Digital  Gold Bull

Good diversification

The 3 months correlation between Applied and Gold is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Gold Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bull Resources and Applied Digital 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 Applied Digital are associated (or correlated) with Gold Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bull Resources has no effect on the direction of Applied Digital i.e., Applied Digital and Gold Bull go up and down completely randomly.

Pair Corralation between Applied Digital and Gold Bull

Given the investment horizon of 90 days Applied Digital is expected to generate 3.9 times less return on investment than Gold Bull. But when comparing it to its historical volatility, Applied Digital is 1.95 times less risky than Gold Bull. It trades about 0.04 of its potential returns per unit of risk. Gold Bull Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Gold Bull Resources on October 20, 2024 and sell it today you would earn a total of  7.00  from holding Gold Bull Resources or generate 28.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Applied Digital  vs.  Gold Bull Resources

Applied Digital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gold Bull Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bull Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Gold Bull reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Digital and Gold Bull

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

The idea behind Applied Digital and Gold Bull Resources 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.