Correlation Between Global Gold and Global Small
Can any of the company-specific risk be diversified away by investing in both Global Gold and Global Small 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 Gold and Global Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Global Small Cap, you can compare the effects of market volatilities on Global Gold and Global Small 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 Gold with a short position of Global Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Global Small.
Diversification Opportunities for Global Gold and Global Small
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GLOBAL and Global is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Global Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Small Cap and Global Gold 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 Gold Fund are associated (or correlated) with Global Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Small Cap has no effect on the direction of Global Gold i.e., Global Gold and Global Small go up and down completely randomly.
Pair Corralation between Global Gold and Global Small
Assuming the 90 days horizon Global Gold is expected to generate 1.69 times less return on investment than Global Small. In addition to that, Global Gold is 2.0 times more volatile than Global Small Cap. It trades about 0.05 of its total potential returns per unit of risk. Global Small Cap is currently generating about 0.16 per unit of volatility. If you would invest 1,826 in Global Small Cap on September 5, 2024 and sell it today you would earn a total of 181.00 from holding Global Small Cap or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Global Small Cap
Performance |
| Timeline |
| Global Gold Fund |
| Global Small Cap |
Global Gold and Global Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Global Small
The main advantage of trading using opposite Global Gold and Global Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Global Small 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 Global Small will offset losses from the drop in Global Small's long position.| Global Gold vs. Artisan High Income | Global Gold vs. Ft 7934 Corporate | Global Gold vs. Touchstone Premium Yield | Global Gold vs. Limited Term Tax |
| Global Small vs. Precious Metals And | Global Small vs. Global Gold Fund | Global Small vs. James Balanced Golden | Global Small vs. Sprott Gold Equity |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |