Correlation Between Gold Road and Bank of America
Can any of the company-specific risk be diversified away by investing in both Gold Road and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Verizon Communications, you can compare the effects of market volatilities on Gold Road and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Bank of America.
Diversification Opportunities for Gold Road and Bank of America
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Bank is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Resources are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Gold Road i.e., Gold Road and Bank of America go up and down completely randomly.
Pair Corralation between Gold Road and Bank of America
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.48 times more return on investment than Bank of America. However, Gold Road is 1.48 times more volatile than Verizon Communications. It trades about 0.2 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.07 per unit of risk. If you would invest 118.00 in Gold Road Resources on December 27, 2024 and sell it today you would earn a total of 43.00 from holding Gold Road Resources or generate 36.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Gold Road Resources vs. Verizon Communications
Performance |
Timeline |
Gold Road Resources |
Verizon Communications |
Gold Road and Bank of America Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gold Road and Bank of America
The main advantage of trading using opposite Gold Road and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.Gold Road vs. Darden Restaurants | Gold Road vs. Renesas Electronics | Gold Road vs. SINGAPORE AIRLINES | Gold Road vs. VARIOUS EATERIES LS |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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