Correlation Between Global Gold and Redwood Real
Can any of the company-specific risk be diversified away by investing in both Global Gold and Redwood Real 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 Redwood Real 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 Redwood Real Estate, you can compare the effects of market volatilities on Global Gold and Redwood Real 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 Redwood Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Redwood Real.
Diversification Opportunities for Global Gold and Redwood Real
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Redwood is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Redwood Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Real Estate 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 Redwood Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Real Estate has no effect on the direction of Global Gold i.e., Global Gold and Redwood Real go up and down completely randomly.
Pair Corralation between Global Gold and Redwood Real
Assuming the 90 days horizon Global Gold Fund is expected to generate 13.59 times more return on investment than Redwood Real. However, Global Gold is 13.59 times more volatile than Redwood Real Estate. It trades about 0.09 of its potential returns per unit of risk. Redwood Real Estate is currently generating about -0.03 per unit of risk. If you would invest 1,280 in Global Gold Fund on September 15, 2024 and sell it today you would earn a total of 44.00 from holding Global Gold Fund or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Redwood Real Estate
Performance |
| Timeline |
| Global Gold Fund |
| Redwood Real Estate |
Global Gold and Redwood Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Redwood Real
The main advantage of trading using opposite Global Gold and Redwood Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Redwood Real 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 Redwood Real will offset losses from the drop in Redwood Real's long position.| Global Gold vs. Redwood Real Estate | Global Gold vs. Guggenheim Risk Managed | Global Gold vs. Deutsche Real Estate | Global Gold vs. Dunham Real Estate |
| Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard 500 Index | Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard Total Stock |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |