Correlation Between Global Gold and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Global Gold and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on Global Gold and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Growth Strategy.
Diversification Opportunities for Global Gold and Growth Strategy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Growth is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Global Gold i.e., Global Gold and Growth Strategy go up and down completely randomly.
Pair Corralation between Global Gold and Growth Strategy
Assuming the 90 days horizon Global Gold Fund is expected to generate 2.85 times more return on investment than Growth Strategy. However, Global Gold is 2.85 times more volatile than Growth Strategy Fund. It trades about 0.04 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.1 per unit of risk. If you would invest 1,033 in Global Gold Fund on September 4, 2024 and sell it today you would earn a total of 253.00 from holding Global Gold Fund or generate 24.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Growth Strategy Fund
Performance |
| Timeline |
| Global Gold Fund |
| Growth Strategy |
Global Gold and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Growth Strategy
The main advantage of trading using opposite Global Gold and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.| Global Gold vs. Oklahoma College Savings | Global Gold vs. Barings Emerging Markets | Global Gold vs. Artisan Emerging Markets | Global Gold vs. Transamerica Emerging Markets |
| Growth Strategy vs. Icon Natural Resources | Growth Strategy vs. Calvert Global Energy | Growth Strategy vs. Invesco Energy Fund | Growth Strategy vs. Jennison Natural Resources |
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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