Correlation Between Global Gold and Largecap Growth
Can any of the company-specific risk be diversified away by investing in both Global Gold and Largecap Growth 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 Largecap Growth 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 Largecap Growth Fund, you can compare the effects of market volatilities on Global Gold and Largecap Growth 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 Largecap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Largecap Growth.
Diversification Opportunities for Global Gold and Largecap Growth
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Largecap is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Largecap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largecap 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 Largecap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largecap Growth has no effect on the direction of Global Gold i.e., Global Gold and Largecap Growth go up and down completely randomly.
Pair Corralation between Global Gold and Largecap Growth
Assuming the 90 days horizon Global Gold is expected to generate 1.09 times less return on investment than Largecap Growth. In addition to that, Global Gold is 1.52 times more volatile than Largecap Growth Fund. It trades about 0.04 of its total potential returns per unit of risk. Largecap Growth Fund is currently generating about 0.07 per unit of volatility. If you would invest 1,557 in Largecap Growth Fund on September 3, 2024 and sell it today you would earn a total of 653.00 from holding Largecap Growth Fund or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Largecap Growth Fund
Performance |
| Timeline |
| Global Gold Fund |
| Largecap Growth |
Global Gold and Largecap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Largecap Growth
The main advantage of trading using opposite Global Gold and Largecap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Largecap Growth 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 Largecap Growth will offset losses from the drop in Largecap Growth's long position.| Global Gold vs. Baird Smallmid Cap | Global Gold vs. The Hartford Small | Global Gold vs. Touchstone Small Cap | Global Gold vs. Small Cap Value |
| Largecap Growth vs. Sprott Gold Equity | Largecap Growth vs. Short Precious Metals | Largecap Growth vs. Franklin Gold Precious | Largecap Growth vs. Global Gold Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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