Correlation Between Duolingo and Gold Futures
Can any of the company-specific risk be diversified away by investing in both Duolingo and Gold Futures 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 Duolingo and Gold Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duolingo and Gold Futures, you can compare the effects of market volatilities on Duolingo and Gold Futures 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 Duolingo with a short position of Gold Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duolingo and Gold Futures.
Diversification Opportunities for Duolingo and Gold Futures
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Duolingo and Gold is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Duolingo and Gold Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Futures and Duolingo 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 Duolingo are associated (or correlated) with Gold Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Futures has no effect on the direction of Duolingo i.e., Duolingo and Gold Futures go up and down completely randomly.
Pair Corralation between Duolingo and Gold Futures
Given the investment horizon of 90 days Duolingo is expected to generate 3.23 times more return on investment than Gold Futures. However, Duolingo is 3.23 times more volatile than Gold Futures. It trades about 0.08 of its potential returns per unit of risk. Gold Futures is currently generating about 0.15 per unit of risk. If you would invest 23,900 in Duolingo on August 27, 2024 and sell it today you would earn a total of 11,297 from holding Duolingo or generate 47.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.92% |
| Values | Daily Returns |
Duolingo vs. Gold Futures
Performance |
| Timeline |
| Duolingo |
| Gold Futures |
Duolingo and Gold Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duolingo and Gold Futures
The main advantage of trading using opposite Duolingo and Gold Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duolingo position performs unexpectedly, Gold Futures 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 Futures will offset losses from the drop in Gold Futures' long position.The idea behind Duolingo and Gold Futures pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gold Futures vs. Live Cattle Futures | Gold Futures vs. Class III Milk | Gold Futures vs. US Dollar | Gold Futures vs. Lumber Futures |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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