Correlation Between Financial and Strikepoint Gold

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Can any of the company-specific risk be diversified away by investing in both Financial and Strikepoint Gold 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 Financial and Strikepoint Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Strikepoint Gold, you can compare the effects of market volatilities on Financial and Strikepoint Gold 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 Financial with a short position of Strikepoint Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Strikepoint Gold.

Diversification Opportunities for Financial and Strikepoint Gold

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Financial and Strikepoint is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Strikepoint Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strikepoint Gold and Financial 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 Financial 15 Split are associated (or correlated) with Strikepoint Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strikepoint Gold has no effect on the direction of Financial i.e., Financial and Strikepoint Gold go up and down completely randomly.

Pair Corralation between Financial and Strikepoint Gold

Assuming the 90 days trading horizon Financial is expected to generate 6.46 times less return on investment than Strikepoint Gold. But when comparing it to its historical volatility, Financial 15 Split is 49.28 times less risky than Strikepoint Gold. It trades about 0.31 of its potential returns per unit of risk. Strikepoint Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Strikepoint Gold on October 4, 2024 and sell it today you would lose (3.00) from holding Strikepoint Gold or give up 15.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Financial 15 Split  vs.  Strikepoint Gold

 Performance 
       Timeline  
Financial 15 Split 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Strikepoint Gold 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Strikepoint Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Strikepoint Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Financial and Strikepoint Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Financial and Strikepoint Gold

The main advantage of trading using opposite Financial and Strikepoint Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, Strikepoint Gold 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 Strikepoint Gold will offset losses from the drop in Strikepoint Gold's long position.
The idea behind Financial 15 Split and Strikepoint Gold 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.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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