Correlation Between Global Gold and Kopernik International
Can any of the company-specific risk be diversified away by investing in both Global Gold and Kopernik International 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 Kopernik International 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 Kopernik International, you can compare the effects of market volatilities on Global Gold and Kopernik International 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 Kopernik International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Kopernik International.
Diversification Opportunities for Global Gold and Kopernik International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Kopernik is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Kopernik International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik International 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 Kopernik International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik International has no effect on the direction of Global Gold i.e., Global Gold and Kopernik International go up and down completely randomly.
Pair Corralation between Global Gold and Kopernik International
Assuming the 90 days horizon Global Gold Fund is expected to generate 3.23 times more return on investment than Kopernik International. However, Global Gold is 3.23 times more volatile than Kopernik International. It trades about 0.21 of its potential returns per unit of risk. Kopernik International is currently generating about -0.04 per unit of risk. If you would invest 1,235 in Global Gold Fund on September 13, 2024 and sell it today you would earn a total of 98.00 from holding Global Gold Fund or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global Gold Fund vs. Kopernik International
Performance |
| Timeline |
| Global Gold Fund |
| Kopernik International |
Global Gold and Kopernik International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Kopernik International
The main advantage of trading using opposite Global Gold and Kopernik International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Kopernik International 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 Kopernik International will offset losses from the drop in Kopernik International's long position.| Global Gold vs. Dana Large Cap | Global Gold vs. Virtus Nfj Large Cap | Global Gold vs. Pace Large Value | Global Gold vs. Qs Large Cap |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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