Correlation Between Global Gold and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Global Gold and Metropolitan West 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 Metropolitan West 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 Metropolitan West Total, you can compare the effects of market volatilities on Global Gold and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Metropolitan West.
Diversification Opportunities for Global Gold and Metropolitan West
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Metropolitan is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Global Gold i.e., Global Gold and Metropolitan West go up and down completely randomly.
Pair Corralation between Global Gold and Metropolitan West
Assuming the 90 days horizon Global Gold Fund is expected to generate 4.81 times more return on investment than Metropolitan West. However, Global Gold is 4.81 times more volatile than Metropolitan West Total. It trades about 0.04 of its potential returns per unit of risk. Metropolitan West Total is currently generating about 0.09 per unit of risk. If you would invest 1,196 in Global Gold Fund on August 29, 2024 and sell it today you would earn a total of 78.00 from holding Global Gold Fund or generate 6.52% 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. Metropolitan West Total
Performance |
| Timeline |
| Global Gold Fund |
| Metropolitan West Total |
Global Gold and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Metropolitan West
The main advantage of trading using opposite Global Gold and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Global Gold vs. First Eagle Gold | Global Gold vs. Oppenheimer Gold Special | Global Gold vs. Aquagold International | Global Gold vs. Morningstar Unconstrained Allocation |
| Metropolitan West vs. T Rowe Price | Metropolitan West vs. Tax Managed Large Cap | Metropolitan West vs. Fundamental Large Cap | Metropolitan West vs. Pace Large Value |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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