Correlation Between Global Gold and Capital World
Can any of the company-specific risk be diversified away by investing in both Global Gold and Capital World 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 Capital World 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 Capital World Bond, you can compare the effects of market volatilities on Global Gold and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Capital World.
Diversification Opportunities for Global Gold and Capital World
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Capital is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Global Gold i.e., Global Gold and Capital World go up and down completely randomly.
Pair Corralation between Global Gold and Capital World
Assuming the 90 days horizon Global Gold Fund is expected to generate 6.86 times more return on investment than Capital World. However, Global Gold is 6.86 times more volatile than Capital World Bond. It trades about 0.25 of its potential returns per unit of risk. Capital World Bond is currently generating about 0.2 per unit of risk. If you would invest 1,221 in Global Gold Fund on September 14, 2024 and sell it today you would earn a total of 112.00 from holding Global Gold Fund or generate 9.17% 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. Capital World Bond
Performance |
| Timeline |
| Global Gold Fund |
| Capital World Bond |
Global Gold and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Capital World
The main advantage of trading using opposite Global Gold and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World'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 |
| Capital World vs. New World Fund | Capital World vs. Bond Fund Of | Capital World vs. American High Income | Capital World vs. Europacific Growth 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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