Correlation Between Income Growth and Global Gold
Can any of the company-specific risk be diversified away by investing in both Income Growth 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 Income Growth and Global Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Growth Fund and Global Gold Fund, you can compare the effects of market volatilities on Income Growth 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 Income Growth with a short position of Global Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Global Gold.
Diversification Opportunities for Income Growth and Global Gold
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Income and Global is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund 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 Income Growth 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 Income Growth Fund 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 Income Growth i.e., Income Growth and Global Gold go up and down completely randomly.
Pair Corralation between Income Growth and Global Gold
Assuming the 90 days horizon Income Growth Fund is expected to generate 0.41 times more return on investment than Global Gold. However, Income Growth Fund is 2.42 times less risky than Global Gold. It trades about 0.35 of its potential returns per unit of risk. Global Gold Fund is currently generating about -0.18 per unit of risk. If you would invest 3,718 in Income Growth Fund on September 1, 2024 and sell it today you would earn a total of 230.00 from holding Income Growth Fund or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Global Gold Fund
Performance |
| Timeline |
| Income Growth |
| Global Gold Fund |
Income Growth and Global Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Global Gold
The main advantage of trading using opposite Income Growth and Global Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth 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.| Income Growth vs. Ultra Fund I | Income Growth vs. Value Fund I | Income Growth vs. Equity Growth Fund | Income Growth vs. International Growth Fund |
| Global Gold vs. Legg Mason Partners | Global Gold vs. Federated Ohio Municipal | Global Gold vs. Ambrus Core Bond | Global Gold vs. Oklahoma Municipal 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |