Correlation Between Global Hard and International Investors
Can any of the company-specific risk be diversified away by investing in both Global Hard and International Investors 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 Global Hard and International Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Hard Assets and International Investors Gold, you can compare the effects of market volatilities on Global Hard and International Investors 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 Global Hard with a short position of International Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Hard and International Investors.
Diversification Opportunities for Global Hard and International Investors
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and International is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Global Hard Assets and International Investors Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Investors and Global Hard 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 Global Hard Assets are associated (or correlated) with International Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Investors has no effect on the direction of Global Hard i.e., Global Hard and International Investors go up and down completely randomly.
Pair Corralation between Global Hard and International Investors
Assuming the 90 days horizon Global Hard is expected to generate 2.61 times less return on investment than International Investors. But when comparing it to its historical volatility, Global Hard Assets is 1.58 times less risky than International Investors. It trades about 0.03 of its potential returns per unit of risk. International Investors Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 964.00 in International Investors Gold on August 31, 2024 and sell it today you would earn a total of 243.00 from holding International Investors Gold or generate 25.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Hard Assets vs. International Investors Gold
Performance |
| Timeline |
| Global Hard Assets |
| International Investors |
Global Hard and International Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Hard and International Investors
The main advantage of trading using opposite Global Hard and International Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Hard position performs unexpectedly, International Investors 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 International Investors will offset losses from the drop in International Investors' long position.| Global Hard vs. T Rowe Price | Global Hard vs. Vanguard Materials Index | Global Hard vs. T Rowe Price | Global Hard vs. Gmo Trust |
| International Investors vs. Energy Basic Materials | International Investors vs. Energy Services Fund | International Investors vs. Jennison Natural Resources | International Investors vs. Ivy Energy 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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