Correlation Between Gold Road and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Gold Road and Chevron Corp 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 Chevron Corp 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 Chevron Corp, you can compare the effects of market volatilities on Gold Road and Chevron Corp 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 Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Chevron Corp.
Diversification Opportunities for Gold Road and Chevron Corp
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gold and Chevron is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Resources are associated (or correlated) with Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of Gold Road i.e., Gold Road and Chevron Corp go up and down completely randomly.
Pair Corralation between Gold Road and Chevron Corp
Assuming the 90 days horizon Gold Road Resources is expected to generate 4.0 times more return on investment than Chevron Corp. However, Gold Road is 4.0 times more volatile than Chevron Corp. It trades about 0.15 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.14 per unit of risk. If you would invest 94.00 in Gold Road Resources on December 29, 2023 and sell it today you would earn a total of 11.00 from holding Gold Road Resources or generate 11.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Gold Road Resources vs. Chevron Corp
Performance |
Timeline |
Gold Road Resources |
Chevron Corp |
Gold Road and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gold Road and Chevron Corp
The main advantage of trading using opposite Gold Road and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's long position.Gold Road vs. Newmont Goldcorp Corp | Gold Road vs. Agnico Eagle Mines | Gold Road vs. Barrick Gold Corp | Gold Road vs. Wheaton Precious Metals |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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