Correlation Between Global Gold and Lifestyle
Can any of the company-specific risk be diversified away by investing in both Global Gold and Lifestyle 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 Lifestyle 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 Lifestyle Ii Growth, you can compare the effects of market volatilities on Global Gold and Lifestyle 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 Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Lifestyle.
Diversification Opportunities for Global Gold and Lifestyle
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Lifestyle is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Lifestyle Ii Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Growth 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 Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Growth has no effect on the direction of Global Gold i.e., Global Gold and Lifestyle go up and down completely randomly.
Pair Corralation between Global Gold and Lifestyle
Assuming the 90 days horizon Global Gold Fund is expected to generate 2.79 times more return on investment than Lifestyle. However, Global Gold is 2.79 times more volatile than Lifestyle Ii Growth. It trades about 0.06 of its potential returns per unit of risk. Lifestyle Ii Growth is currently generating about 0.08 per unit of risk. If you would invest 928.00 in Global Gold Fund on November 9, 2024 and sell it today you would earn a total of 489.00 from holding Global Gold Fund or generate 52.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Lifestyle Ii Growth
Performance |
| Timeline |
| Global Gold Fund |
| Lifestyle Ii Growth |
Global Gold and Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Lifestyle
The main advantage of trading using opposite Global Gold and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Lifestyle 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 Lifestyle will offset losses from the drop in Lifestyle's long position.| Global Gold vs. William Blair Small | Global Gold vs. Fpa Queens Road | Global Gold vs. American Century Etf | Global Gold vs. Palm Valley Capital |
| Lifestyle vs. Ab Bond Inflation | Lifestyle vs. Nuveen Strategic Municipal | Lifestyle vs. Morningstar Defensive Bond | Lifestyle vs. Artisan High Income |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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