Correlation Between International Investors and Global Gold
Can any of the company-specific risk be diversified away by investing in both International Investors 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 International Investors and Global Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Global Gold Fund, you can compare the effects of market volatilities on International Investors 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 International Investors with a short position of Global Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Global Gold.
Diversification Opportunities for International Investors and Global Gold
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between International and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold 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 International Investors 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 International Investors Gold 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 International Investors i.e., International Investors and Global Gold go up and down completely randomly.
Pair Corralation between International Investors and Global Gold
Assuming the 90 days horizon International Investors Gold is expected to generate 0.96 times more return on investment than Global Gold. However, International Investors Gold is 1.05 times less risky than Global Gold. It trades about 0.06 of its potential returns per unit of risk. Global Gold Fund is currently generating about 0.05 per unit of risk. If you would invest 920.00 in International Investors Gold on September 3, 2024 and sell it today you would earn a total of 57.00 from holding International Investors Gold or generate 6.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Investors Gold vs. Global Gold Fund
Performance |
| Timeline |
| International Investors |
| Global Gold Fund |
International Investors and Global Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Investors and Global Gold
The main advantage of trading using opposite International Investors and Global Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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.| International Investors vs. First Eagle Gold | International Investors vs. First Eagle Gold | International Investors vs. Oppenheimer Gold Spec | International Investors vs. Oppenheimer Gold Special |
| Global Gold vs. Baird Smallmid Cap | Global Gold vs. The Hartford Small | Global Gold vs. Touchstone Small Cap | Global Gold vs. Small Cap Value |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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