Correlation Between The Gold and Summit Global
Can any of the company-specific risk be diversified away by investing in both The Gold and Summit Global 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 The Gold and Summit Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gold Bullion and Summit Global Investments, you can compare the effects of market volatilities on The Gold and Summit Global 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 The Gold with a short position of Summit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Summit Global.
Diversification Opportunities for The Gold and Summit Global
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between The and Summit is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Summit Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Global Investments and The Gold 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 The Gold Bullion are associated (or correlated) with Summit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Global Investments has no effect on the direction of The Gold i.e., The Gold and Summit Global go up and down completely randomly.
Pair Corralation between The Gold and Summit Global
Assuming the 90 days horizon The Gold Bullion is expected to generate 1.4 times more return on investment than Summit Global. However, The Gold is 1.4 times more volatile than Summit Global Investments. It trades about 0.33 of its potential returns per unit of risk. Summit Global Investments is currently generating about 0.43 per unit of risk. If you would invest 1,979 in The Gold Bullion on October 30, 2024 and sell it today you would earn a total of 95.00 from holding The Gold Bullion or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gold Bullion vs. Summit Global Investments
Performance |
| Timeline |
| Gold Bullion |
| Summit Global Investments |
The Gold and Summit Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Gold and Summit Global
The main advantage of trading using opposite The Gold and Summit Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gold position performs unexpectedly, Summit Global 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 Summit Global will offset losses from the drop in Summit Global's long position.| The Gold vs. Conservative Balanced Allocation | The Gold vs. Transamerica Asset Allocation | The Gold vs. Delaware Limited Term Diversified | The Gold vs. Valic Company I |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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