Correlation Between Gold Road and InPlay Oil

Can any of the company-specific risk be diversified away by investing in both Gold Road and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on Gold Road and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and InPlay Oil.

Diversification Opportunities for Gold Road and InPlay Oil

-0.54

Correlation Coefficient

Gold Road  InPlay Oil

Excellent diversification

The 3 months correlation between Gold and InPlay is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Gold Road i.e., Gold Road and InPlay Oil go up and down completely randomly.

Pair Corralation between Gold Road and InPlay Oil

Assuming the 90 days horizon Gold Road Resources is expected to generate 1.19 times more return on investment than InPlay Oil. However, Gold Road is 1.19 times more volatile than InPlay Oil Corp. It trades about 0.19 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.09 per unit of risk. If you would invest  98.00  in Gold Road Resources on September 14, 2024 and sell it today you would earn a total of  30.00  from holding Gold Road Resources or generate 30.61% return on investment over 90 days.

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

Gold Road Resources  vs.  InPlay Oil Corp

Gold Road Resources

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Gold Road and InPlay Oil

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

The idea behind Gold Road Resources and InPlay Oil Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.