Correlation Between GoGold Resources and Goff Corp

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

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

Diversification Opportunities for GoGold Resources and Goff Corp

-0.37

Correlation Coefficient

GoGold Resources  Goff Corp

Very good diversification

The 3 months correlation between GoGold and Goff is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and Goff Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goff Corp and GoGold Resources 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 GoGold Resources are associated (or correlated) with Goff Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goff Corp has no effect on the direction of GoGold Resources i.e., GoGold Resources and Goff Corp go up and down completely randomly.

Pair Corralation between GoGold Resources and Goff Corp

Assuming the 90 days horizon GoGold Resources is expected to generate 1.09 times less return on investment than Goff Corp. But when comparing it to its historical volatility, GoGold Resources is 3.13 times less risky than Goff Corp. It trades about 0.04 of its potential returns per unit of risk. Goff Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.40  in Goff Corp on September 10, 2024 and sell it today you would lose (0.48) from holding Goff Corp or give up 34.29% of portfolio value over 90 days.

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

GoGold Resources  vs.  Goff Corp

GoGold Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, GoGold Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goff Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goff Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Goff Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GoGold Resources and Goff Corp

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

The idea behind GoGold Resources and Goff 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..