Correlation Between Precious Metals and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Precious Metals and Energy Fund 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 Precious Metals and Energy Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals Fund and Energy Fund Class, you can compare the effects of market volatilities on Precious Metals and Energy Fund 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 Precious Metals with a short position of Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Energy Fund.
Diversification Opportunities for Precious Metals and Energy Fund
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precious and Energy is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals Fund and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class and Precious Metals 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 Precious Metals Fund are associated (or correlated) with Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Precious Metals i.e., Precious Metals and Energy Fund go up and down completely randomly.
Pair Corralation between Precious Metals and Energy Fund
Assuming the 90 days horizon Precious Metals Fund is expected to under-perform the Energy Fund. In addition to that, Precious Metals is 1.86 times more volatile than Energy Fund Class. It trades about -0.15 of its total potential returns per unit of risk. Energy Fund Class is currently generating about 0.31 per unit of volatility. If you would invest 23,730 in Energy Fund Class on September 1, 2024 and sell it today you would earn a total of 1,737 from holding Energy Fund Class or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals Fund vs. Energy Fund Class
Performance |
| Timeline |
| Precious Metals |
| Energy Fund Class |
Precious Metals and Energy Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Energy Fund
The main advantage of trading using opposite Precious Metals and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.| Precious Metals vs. Energy Fund Investor | Precious Metals vs. Energy Services Fund | Precious Metals vs. Basic Materials Fund | Precious Metals vs. Health Care Fund |
| Energy Fund vs. Basic Materials Fund | Energy Fund vs. Electronics Fund Investor | Energy Fund vs. Health Care Fund | Energy Fund vs. Precious Metals Fund |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |