Correlation Between Global Gold and Intermediate Term
Can any of the company-specific risk be diversified away by investing in both Global Gold and Intermediate Term 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 Intermediate Term 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 Intermediate Term Bond Fund, you can compare the effects of market volatilities on Global Gold and Intermediate Term 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 Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Intermediate Term.
Diversification Opportunities for Global Gold and Intermediate Term
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Intermediate is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Intermediate Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term 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 Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Bond has no effect on the direction of Global Gold i.e., Global Gold and Intermediate Term go up and down completely randomly.
Pair Corralation between Global Gold and Intermediate Term
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Intermediate Term. In addition to that, Global Gold is 5.9 times more volatile than Intermediate Term Bond Fund. It trades about -0.14 of its total potential returns per unit of risk. Intermediate Term Bond Fund is currently generating about 0.11 per unit of volatility. If you would invest 918.00 in Intermediate Term Bond Fund on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Intermediate Term Bond Fund or generate 0.76% 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. Intermediate Term Bond Fund
Performance |
| Timeline |
| Global Gold Fund |
| Intermediate Term Bond |
Global Gold and Intermediate Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Intermediate Term
The main advantage of trading using opposite Global Gold and Intermediate Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Intermediate Term 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 Intermediate Term will offset losses from the drop in Intermediate Term'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 |
| Intermediate Term vs. Ab Value Fund | Intermediate Term vs. Scharf Global Opportunity | Intermediate Term vs. Volumetric Fund Volumetric | Intermediate Term vs. Rbc Microcap 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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