Correlation Between Global Gold and Short Precious
Can any of the company-specific risk be diversified away by investing in both Global Gold and Short Precious 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 Short Precious 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 Short Precious Metals, you can compare the effects of market volatilities on Global Gold and Short Precious 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 Short Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Short Precious.
Diversification Opportunities for Global Gold and Short Precious
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GLOBAL and Short is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Global Gold i.e., Global Gold and Short Precious go up and down completely randomly.
Pair Corralation between Global Gold and Short Precious
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Short Precious. But the mutual fund apears to be less risky and, when comparing its historical volatility, Global Gold Fund is 1.06 times less risky than Short Precious. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Short Precious Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 931.00 in Short Precious Metals on September 4, 2024 and sell it today you would earn a total of 66.00 from holding Short Precious Metals or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Short Precious Metals
Performance |
| Timeline |
| Global Gold Fund |
| Short Precious Metals |
Global Gold and Short Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Short Precious
The main advantage of trading using opposite Global Gold and Short Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Short Precious 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 Short Precious will offset losses from the drop in Short Precious' long position.| Global Gold vs. Putnam Convertible Incm Gwth | Global Gold vs. Rationalpier 88 Convertible | Global Gold vs. Advent Claymore Convertible | Global Gold vs. Gabelli Convertible And |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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