Correlation Between Gold Road and Penske Automotive
Can any of the company-specific risk be diversified away by investing in both Gold Road and Penske Automotive 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 Penske Automotive 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 Penske Automotive Group, you can compare the effects of market volatilities on Gold Road and Penske Automotive 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 Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Penske Automotive.
Diversification Opportunities for Gold Road and Penske Automotive
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Penske is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive 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 Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of Gold Road i.e., Gold Road and Penske Automotive go up and down completely randomly.
Pair Corralation between Gold Road and Penske Automotive
Assuming the 90 days horizon Gold Road Resources is expected to under-perform the Penske Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Gold Road Resources is 1.07 times less risky than Penske Automotive. The stock trades about -0.08 of its potential returns per unit of risk. The Penske Automotive Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,684 in Penske Automotive Group on December 4, 2024 and sell it today you would earn a total of 116.00 from holding Penske Automotive Group or generate 0.74% 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. Penske Automotive Group
Performance |
Timeline |
Gold Road Resources |
Penske Automotive |
Gold Road and Penske Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gold Road and Penske Automotive
The main advantage of trading using opposite Gold Road and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Penske Automotive 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 Penske Automotive will offset losses from the drop in Penske Automotive's long position.Gold Road vs. GALENA MINING LTD | Gold Road vs. GRIFFIN MINING LTD | Gold Road vs. GREENX METALS LTD | Gold Road vs. Ringmetall SE |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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