Correlation Between James Balanced and Global Gold
Can any of the company-specific risk be diversified away by investing in both James Balanced 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 James Balanced and Global Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Balanced Golden and Global Gold Fund, you can compare the effects of market volatilities on James Balanced 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 James Balanced with a short position of Global Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Balanced and Global Gold.
Diversification Opportunities for James Balanced and Global Gold
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between James and GLOBAL is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden 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 James Balanced 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 James Balanced Golden 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 James Balanced i.e., James Balanced and Global Gold go up and down completely randomly.
Pair Corralation between James Balanced and Global Gold
Assuming the 90 days horizon James Balanced Golden is expected to generate 0.2 times more return on investment than Global Gold. However, James Balanced Golden is 5.08 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 -0.14 per unit of risk. If you would invest 2,264 in James Balanced Golden on September 3, 2024 and sell it today you would earn a total of 64.00 from holding James Balanced Golden or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
James Balanced Golden vs. Global Gold Fund
Performance |
| Timeline |
| James Balanced Golden |
| Global Gold Fund |
James Balanced and Global Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Balanced and Global Gold
The main advantage of trading using opposite James Balanced and Global Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Balanced 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.| James Balanced vs. Vanguard Lifestrategy Moderate | James Balanced vs. Vanguard Lifestrategy Income | James Balanced vs. Vanguard Lifestrategy Growth | James Balanced vs. Vanguard Explorer Fund |
| Global Gold vs. First Eagle Gold | Global Gold vs. First Eagle Gold | Global Gold vs. Oppenheimer Gold Spec | Global Gold vs. Oppenheimer Gold Special |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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