Correlation Between Global Small and Invesco Gold
Can any of the company-specific risk be diversified away by investing in both Global Small and Invesco Gold 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 Global Small and Invesco Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Small Cap and Invesco Gold Special, you can compare the effects of market volatilities on Global Small and Invesco Gold 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 Global Small with a short position of Invesco Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Small and Invesco Gold.
Diversification Opportunities for Global Small and Invesco Gold
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Invesco is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Small Cap and Invesco Gold Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Gold Special and Global Small 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 Global Small Cap are associated (or correlated) with Invesco Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Gold Special has no effect on the direction of Global Small i.e., Global Small and Invesco Gold go up and down completely randomly.
Pair Corralation between Global Small and Invesco Gold
Assuming the 90 days horizon Global Small Cap is expected to generate 0.49 times more return on investment than Invesco Gold. However, Global Small Cap is 2.03 times less risky than Invesco Gold. It trades about 0.37 of its potential returns per unit of risk. Invesco Gold Special is currently generating about -0.12 per unit of risk. If you would invest 1,853 in Global Small Cap on September 1, 2024 and sell it today you would earn a total of 151.00 from holding Global Small Cap or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global Small Cap vs. Invesco Gold Special
Performance |
| Timeline |
| Global Small Cap |
| Invesco Gold Special |
Global Small and Invesco Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Small and Invesco Gold
The main advantage of trading using opposite Global Small and Invesco Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Small position performs unexpectedly, Invesco Gold 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 Invesco Gold will offset losses from the drop in Invesco Gold's long position.| Global Small vs. Ep Emerging Markets | Global Small vs. Goldman Sachs Emerging | Global Small vs. Rbc Emerging Markets | Global Small vs. Dws Emerging Markets |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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