Correlation Between Platinum and Micro Gold
Can any of the company-specific risk be diversified away by investing in both Platinum and Micro 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 Platinum and Micro Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum and Micro Gold Futures, you can compare the effects of market volatilities on Platinum and Micro 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 Platinum with a short position of Micro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum and Micro Gold.
Diversification Opportunities for Platinum and Micro Gold
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Platinum and Micro is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Platinum and Micro Gold Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Gold Futures and Platinum 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 Platinum are associated (or correlated) with Micro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Gold Futures has no effect on the direction of Platinum i.e., Platinum and Micro Gold go up and down completely randomly.
Pair Corralation between Platinum and Micro Gold
Assuming the 90 days horizon Platinum is expected to generate 1.94 times more return on investment than Micro Gold. However, Platinum is 1.94 times more volatile than Micro Gold Futures. It trades about 0.31 of its potential returns per unit of risk. Micro Gold Futures is currently generating about 0.38 per unit of risk. If you would invest 91,050 in Platinum on November 1, 2024 and sell it today you would earn a total of 11,560 from holding Platinum or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum vs. Micro Gold Futures
Performance |
| Timeline |
| Platinum |
| Micro Gold Futures |
Platinum and Micro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum and Micro Gold
The main advantage of trading using opposite Platinum and Micro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum position performs unexpectedly, Micro 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 Micro Gold will offset losses from the drop in Micro Gold's long position.| Platinum vs. Corn Futures | Platinum vs. Aluminum Futures | Platinum vs. Cocoa | Platinum vs. Five Year Treasury Note |
| Micro Gold vs. 10 Year T Note Futures | Micro Gold vs. Platinum | Micro Gold vs. Lean Hogs Futures | Micro Gold vs. Orange Juice |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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