Correlation Between Total Return and Europac Gold
Can any of the company-specific risk be diversified away by investing in both Total Return and Europac 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 Total Return and Europac Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Return Bond and Europac Gold Fund, you can compare the effects of market volatilities on Total Return and Europac 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 Total Return with a short position of Europac Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and Europac Gold.
Diversification Opportunities for Total Return and Europac Gold
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TOTAL and Europac is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Bond and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Total Return 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 Total Return Bond are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Total Return i.e., Total Return and Europac Gold go up and down completely randomly.
Pair Corralation between Total Return and Europac Gold
Assuming the 90 days horizon Total Return is expected to generate 2.93 times less return on investment than Europac Gold. But when comparing it to its historical volatility, Total Return Bond is 4.09 times less risky than Europac Gold. It trades about 0.03 of its potential returns per unit of risk. Europac Gold Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 988.00 in Europac Gold Fund on September 3, 2024 and sell it today you would earn a total of 125.00 from holding Europac Gold Fund or generate 12.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Return Bond vs. Europac Gold Fund
Performance |
| Timeline |
| Total Return Bond |
| Europac Gold |
Total Return and Europac Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Return and Europac Gold
The main advantage of trading using opposite Total Return and Europac Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Return position performs unexpectedly, Europac 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 Europac Gold will offset losses from the drop in Europac Gold's long position.| Total Return vs. Vanguard Total Bond | Total Return vs. Vanguard Total Bond | Total Return vs. Vanguard Total Bond | Total Return vs. Vanguard Total Bond |
| Europac Gold vs. First Eagle Gold | Europac Gold vs. First Eagle Gold | Europac Gold vs. Oppenheimer Gold Spec | Europac 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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