Correlation Between Gold Bullion and Europac Gold
Can any of the company-specific risk be diversified away by investing in both Gold Bullion 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 Gold Bullion and Europac Gold 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 Europac Gold Fund, you can compare the effects of market volatilities on Gold Bullion 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 Gold Bullion with a short position of Europac Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bullion and Europac Gold.
Diversification Opportunities for Gold Bullion and Europac Gold
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and Europac is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Gold Bullion 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 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 Gold Bullion i.e., Gold Bullion and Europac Gold go up and down completely randomly.
Pair Corralation between Gold Bullion and Europac Gold
Assuming the 90 days horizon The Gold Bullion is expected to generate 0.61 times more return on investment than Europac Gold. However, The Gold Bullion is 1.64 times less risky than Europac Gold. It trades about -0.11 of its potential returns per unit of risk. Europac Gold Fund is currently generating about -0.13 per unit of risk. If you would invest 2,720 in The Gold Bullion on September 1, 2024 and sell it today you would lose (90.00) from holding The Gold Bullion or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Gold Bullion vs. Europac Gold Fund
Performance |
| Timeline |
| Gold Bullion |
| Europac Gold |
Gold Bullion and Europac Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bullion and Europac Gold
The main advantage of trading using opposite Gold Bullion and Europac Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bullion 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.| Gold Bullion vs. Quantified Market Leaders | Gold Bullion vs. Quantified Managed Income | Gold Bullion vs. Quantified Alternative Investment | Gold Bullion vs. Quantified Stf Fund |
| Europac Gold vs. Europac International Value | Europac Gold vs. Europac International Dividend | Europac Gold vs. Ep Emerging Markets | Europac Gold vs. Europac International Bond |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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