Correlation Between Global X and VanEck Gold
Can any of the company-specific risk be diversified away by investing in both Global X and VanEck 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 Global X and VanEck Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Gold and VanEck Gold Miners, you can compare the effects of market volatilities on Global X and VanEck 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 Global X with a short position of VanEck Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and VanEck Gold.
Diversification Opportunities for Global X and VanEck Gold
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and VanEck is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Global X Gold and VanEck Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Gold Miners and Global X 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 X Gold are associated (or correlated) with VanEck Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Gold Miners has no effect on the direction of Global X i.e., Global X and VanEck Gold go up and down completely randomly.
Pair Corralation between Global X and VanEck Gold
Given the investment horizon of 90 days Global X Gold is expected to generate 1.08 times more return on investment than VanEck Gold. However, Global X is 1.08 times more volatile than VanEck Gold Miners. It trades about 0.04 of its potential returns per unit of risk. VanEck Gold Miners is currently generating about 0.04 per unit of risk. If you would invest 2,578 in Global X Gold on August 27, 2024 and sell it today you would earn a total of 702.00 from holding Global X Gold or generate 27.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Gold vs. VanEck Gold Miners
Performance |
| Timeline |
| Global X Gold |
| VanEck Gold Miners |
Global X and VanEck Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and VanEck Gold
The main advantage of trading using opposite Global X and VanEck Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, VanEck 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 VanEck Gold will offset losses from the drop in VanEck Gold's long position.| Global X vs. US Global GO | Global X vs. Sprott Junior Gold | Global X vs. Sprott Gold Miners | Global X vs. iShares MSCI Global |
| VanEck Gold vs. VanEck Junior Gold | VanEck Gold vs. iShares Silver Trust | VanEck Gold vs. SPDR Gold Shares | VanEck Gold vs. Newmont Goldcorp Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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