Correlation Between Gold and Hood River

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

By analyzing existing cross correlation between Gold And Precious and Hood River Small Cap, you can compare the effects of market volatilities on Gold and Hood River 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 with a short position of Hood River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold and Hood River.

Diversification Opportunities for Gold and Hood River

-0.31

Correlation Coefficient

Gold  Hood River

Very good diversification

The 3 months correlation between Gold and Hood is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Hood River Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hood River Small and Gold 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 And Precious are associated (or correlated) with Hood River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hood River Small has no effect on the direction of Gold i.e., Gold and Hood River go up and down completely randomly.

Pair Corralation between Gold and Hood River

Assuming the 90 days horizon Gold is expected to generate 21.93 times less return on investment than Hood River. In addition to that, Gold is 1.37 times more volatile than Hood River Small Cap. It trades about 0.01 of its total potential returns per unit of risk. Hood River Small Cap is currently generating about 0.19 per unit of volatility. If you would invest  7,223  in Hood River Small Cap on September 13, 2024 and sell it today you would earn a total of  1,109  from holding Hood River Small Cap or generate 15.35% return on investment over 90 days.

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

Gold And Precious  vs.  Hood River Small Cap

Gold And Precious

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Gold And Precious has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hood River Small

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hood River Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hood River showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold and Hood River

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

The idea behind Gold And Precious and Hood River Small Cap 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 Stocks Directory module to find actively traded stocks across global markets.