Correlation Between GOLD ROAD and AIRBNB INC

Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and AIRBNB INC 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 GOLD ROAD and AIRBNB INC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOLD ROAD RES and AIRBNB INC DL 01, you can compare the effects of market volatilities on GOLD ROAD and AIRBNB INC 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 GOLD ROAD with a short position of AIRBNB INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and AIRBNB INC.

Diversification Opportunities for GOLD ROAD and AIRBNB INC

0.76

Correlation Coefficient

GOLD ROAD  AIRBNB INC

Poor diversification

The 3 months correlation between GOLD and AIRBNB is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and AIRBNB INC DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIRBNB INC DL and GOLD ROAD 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 GOLD ROAD RES are associated (or correlated) with AIRBNB INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIRBNB INC DL has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and AIRBNB INC go up and down completely randomly.

Pair Corralation between GOLD ROAD and AIRBNB INC

Assuming the 90 days trading horizon GOLD ROAD is expected to generate 1.59 times less return on investment than AIRBNB INC. In addition to that, GOLD ROAD is 1.05 times more volatile than AIRBNB INC DL 01. It trades about 0.03 of its total potential returns per unit of risk. AIRBNB INC DL 01 is currently generating about 0.05 per unit of volatility. If you would invest  7,806  in AIRBNB INC DL 01 on September 14, 2024 and sell it today you would earn a total of  5,534  from holding AIRBNB INC DL 01 or generate 70.89% return on investment over 90 days.

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

GOLD ROAD RES  vs.  AIRBNB INC DL 01

GOLD ROAD RES

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

AIRBNB INC DL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIRBNB INC DL 01 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AIRBNB INC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOLD ROAD and AIRBNB INC

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

The idea behind GOLD ROAD RES and AIRBNB INC DL 01 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 Transaction History module to view history of all your transactions and understand their impact on performance.