Correlation Between Europac Gold and Gold Bullion
Can any of the company-specific risk be diversified away by investing in both Europac Gold and Gold Bullion 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 Europac Gold and Gold Bullion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europac Gold Fund and The Gold Bullion, you can compare the effects of market volatilities on Europac Gold and Gold Bullion 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 Europac Gold with a short position of Gold Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Gold Bullion.
Diversification Opportunities for Europac Gold and Gold Bullion
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Europac and Gold is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion and Europac 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 Europac Gold Fund are associated (or correlated) with Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of Europac Gold i.e., Europac Gold and Gold Bullion go up and down completely randomly.
Pair Corralation between Europac Gold and Gold Bullion
Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Gold Bullion. In addition to that, Europac Gold is 1.64 times more volatile than The Gold Bullion. It trades about -0.13 of its total potential returns per unit of risk. The Gold Bullion is currently generating about -0.11 per unit of volatility. If you would invest 2,720 in The Gold Bullion on September 1, 2024 and sell it today you would lose (90.00) from holding The Gold Bullion or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Europac Gold Fund vs. The Gold Bullion
Performance |
| Timeline |
| Europac Gold |
| Gold Bullion |
Europac Gold and Gold Bullion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europac Gold and Gold Bullion
The main advantage of trading using opposite Europac Gold and Gold Bullion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold position performs unexpectedly, Gold Bullion 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 Bullion will offset losses from the drop in Gold Bullion's long position.| Europac Gold vs. Europac International Value | Europac Gold vs. Europac International Dividend | Europac Gold vs. Ep Emerging Markets | Europac Gold vs. Europac International Bond |
| Gold Bullion vs. Quantified Market Leaders | Gold Bullion vs. Quantified Managed Income | Gold Bullion vs. Quantified Alternative Investment | Gold Bullion vs. Quantified Stf 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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