Correlation Between Dana Large and Goehring Rozencwajg

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

By analyzing existing cross correlation between Dana Large Cap and Goehring Rozencwajg Resources, you can compare the effects of market volatilities on Dana Large and Goehring Rozencwajg 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 Dana Large with a short position of Goehring Rozencwajg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Goehring Rozencwajg.

Diversification Opportunities for Dana Large and Goehring Rozencwajg

0.36

Correlation Coefficient

Dana Large  Goehring Rozencwajg

Weak diversification

The 3 months correlation between Dana and Goehring is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Goehring Rozencwajg Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goehring Rozencwajg and Dana Large 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 Dana Large Cap are associated (or correlated) with Goehring Rozencwajg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goehring Rozencwajg has no effect on the direction of Dana Large i.e., Dana Large and Goehring Rozencwajg go up and down completely randomly.

Pair Corralation between Dana Large and Goehring Rozencwajg

Assuming the 90 days horizon Dana Large Cap is expected to generate 0.53 times more return on investment than Goehring Rozencwajg. However, Dana Large Cap is 1.87 times less risky than Goehring Rozencwajg. It trades about 0.06 of its potential returns per unit of risk. Goehring Rozencwajg Resources is currently generating about -0.07 per unit of risk. If you would invest  2,545  in Dana Large Cap on September 20, 2024 and sell it today you would earn a total of  79.00  from holding Dana Large Cap or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dana Large Cap  vs.  Goehring Rozencwajg Resources

Dana Large Cap

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Large Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dana Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goehring Rozencwajg

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dana Large and Goehring Rozencwajg

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

The idea behind Dana Large Cap and Goehring Rozencwajg Resources 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.