Correlation Between Absolute Convertible and Gold
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and 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 Absolute Convertible and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Gold And Precious, you can compare the effects of market volatilities on Absolute Convertible and 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 Absolute Convertible with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Gold.
Diversification Opportunities for Absolute Convertible and Gold
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Absolute and Gold is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Gold go up and down completely randomly.
Pair Corralation between Absolute Convertible and Gold
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.17 times more return on investment than Gold. However, Absolute Convertible Arbitrage is 6.03 times less risky than Gold. It trades about -0.14 of its potential returns per unit of risk. Gold And Precious is currently generating about -0.14 per unit of risk. If you would invest 1,146 in Absolute Convertible Arbitrage on September 19, 2024 and sell it today you would lose (10.00) from holding Absolute Convertible Arbitrage or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Gold And Precious
Performance |
| Timeline |
| Absolute Convertible |
| Gold And Precious |
Absolute Convertible and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Gold
The main advantage of trading using opposite Absolute Convertible and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, 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 Gold will offset losses from the drop in Gold's long position.| Absolute Convertible vs. Calamos Dynamic Convertible | Absolute Convertible vs. Fidelity Sai Convertible | Absolute Convertible vs. Virtus Convertible | Absolute Convertible vs. Gabelli Convertible And |
| Gold vs. Near Term Tax Free | Gold vs. Us Global Investors | Gold vs. Global Resources Fund | Gold vs. Us Government Securities |
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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