Correlation Between Mid Cap and Global Gold
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Global Gold 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 Mid Cap and Global Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value and Global Gold Fund, you can compare the effects of market volatilities on Mid Cap and Global Gold 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 Mid Cap with a short position of Global Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Global Gold.
Diversification Opportunities for Mid Cap and Global Gold
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mid and Global is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and Global Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Gold Fund and Mid Cap 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 Mid Cap Value are associated (or correlated) with Global Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Gold Fund has no effect on the direction of Mid Cap i.e., Mid Cap and Global Gold go up and down completely randomly.
Pair Corralation between Mid Cap and Global Gold
Assuming the 90 days horizon Mid Cap is expected to generate 1.54 times less return on investment than Global Gold. But when comparing it to its historical volatility, Mid Cap Value is 2.51 times less risky than Global Gold. It trades about 0.07 of its potential returns per unit of risk. Global Gold Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,069 in Global Gold Fund on August 31, 2024 and sell it today you would earn a total of 261.00 from holding Global Gold Fund or generate 24.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Mid Cap Value vs. Global Gold Fund
Performance |
| Timeline |
| Mid Cap Value |
| Global Gold Fund |
Mid Cap and Global Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Global Gold
The main advantage of trading using opposite Mid Cap and Global Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Global Gold 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 Global Gold will offset losses from the drop in Global Gold's long position.| Mid Cap vs. Janus Triton Fund | Mid Cap vs. New World Fund | Mid Cap vs. Fidelity Mid Cap | Mid Cap vs. Mfs Value Fund |
| Global Gold vs. First Eagle Gold | Global Gold vs. First Eagle Gold | Global Gold vs. First Eagle Gold | Global Gold vs. Oppenheimer Gold Special |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |