Correlation Between GOLD ROAD and Targa Resources

Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and Targa 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 GOLD ROAD and Targa Resources 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 Targa Resources Corp, you can compare the effects of market volatilities on GOLD ROAD and Targa 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 GOLD ROAD with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Targa Resources.

Diversification Opportunities for GOLD ROAD and Targa Resources

0.45

Correlation Coefficient

GOLD ROAD  Targa Resources

Very weak diversification

The 3 months correlation between GOLD and Targa is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp 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 Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Targa Resources go up and down completely randomly.

Pair Corralation between GOLD ROAD and Targa Resources

Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 0.99 times more return on investment than Targa Resources. However, GOLD ROAD RES is 1.01 times less risky than Targa Resources. It trades about 0.13 of its potential returns per unit of risk. Targa Resources Corp is currently generating about 0.07 per unit of risk. If you would invest  120.00  in GOLD ROAD RES on December 20, 2024 and sell it today you would earn a total of  21.00  from holding GOLD ROAD RES or generate 17.5% return on investment over 90 days.

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

GOLD ROAD RES  vs.  Targa Resources Corp

GOLD ROAD RES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Targa Resources Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Targa Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Targa Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GOLD ROAD and Targa Resources

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

The idea behind GOLD ROAD RES and Targa Resources 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..