Correlation Between Global Small and Precious Metals
Can any of the company-specific risk be diversified away by investing in both Global Small and Precious Metals 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 Precious Metals 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 Precious Metals And, you can compare the effects of market volatilities on Global Small and Precious Metals 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 Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Small and Precious Metals.
Diversification Opportunities for Global Small and Precious Metals
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Precious is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global Small Cap and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And 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 Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of Global Small i.e., Global Small and Precious Metals go up and down completely randomly.
Pair Corralation between Global Small and Precious Metals
Assuming the 90 days horizon Global Small Cap is expected to generate 0.59 times more return on investment than Precious Metals. However, Global Small Cap is 1.69 times less risky than Precious Metals. It trades about 0.17 of its potential returns per unit of risk. Precious Metals And is currently generating about 0.06 per unit of risk. If you would invest 1,736 in Global Small Cap on September 5, 2024 and sell it today you would earn a total of 271.00 from holding Global Small Cap or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Small Cap vs. Precious Metals And
Performance |
| Timeline |
| Global Small Cap |
| Precious Metals And |
Global Small and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Small and Precious Metals
The main advantage of trading using opposite Global Small and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Small position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.| Global Small vs. Precious Metals And | Global Small vs. Global Gold Fund | Global Small vs. James Balanced Golden | Global Small vs. Sprott Gold Equity |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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