Correlation Between Global Gold and Total Return
Can any of the company-specific risk be diversified away by investing in both Global Gold and Total Return 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 Total Return 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 Total Return Bond, you can compare the effects of market volatilities on Global Gold and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Total Return.
Diversification Opportunities for Global Gold and Total Return
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Total is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Global Gold i.e., Global Gold and Total Return go up and down completely randomly.
Pair Corralation between Global Gold and Total Return
Assuming the 90 days horizon Global Gold Fund is expected to generate 5.93 times more return on investment than Total Return. However, Global Gold is 5.93 times more volatile than Total Return Bond. It trades about 0.07 of its potential returns per unit of risk. Total Return Bond is currently generating about 0.1 per unit of risk. If you would invest 1,265 in Global Gold Fund on September 12, 2024 and sell it today you would earn a total of 31.00 from holding Global Gold Fund or generate 2.45% 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. Total Return Bond
Performance |
| Timeline |
| Global Gold Fund |
| Total Return Bond |
Global Gold and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Total Return
The main advantage of trading using opposite Global Gold and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Global Gold vs. Technology Ultrasector Profund | Global Gold vs. Towpath Technology | Global Gold vs. Columbia Global Technology | Global Gold vs. Goldman Sachs Technology |
| Total Return vs. Investec Emerging Markets | Total Return vs. Black Oak Emerging | Total Return vs. Rbc Emerging Markets | Total Return vs. Dws Emerging Markets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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