Correlation Between Balanced Fund and Gold
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and 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 Balanced Fund and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Gold And Precious, you can compare the effects of market volatilities on Balanced Fund and 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 Balanced Fund with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Gold.
Diversification Opportunities for Balanced Fund and Gold
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balanced and Gold is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Balanced Fund i.e., Balanced Fund and Gold go up and down completely randomly.
Pair Corralation between Balanced Fund and Gold
Assuming the 90 days horizon Balanced Fund is expected to generate 5.56 times less return on investment than Gold. But when comparing it to its historical volatility, Balanced Fund Investor is 4.74 times less risky than Gold. It trades about 0.16 of its potential returns per unit of risk. Gold And Precious is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,230 in Gold And Precious on September 13, 2024 and sell it today you would earn a total of 81.00 from holding Gold And Precious or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Gold And Precious
Performance |
| Timeline |
| Balanced Fund Investor |
| Gold And Precious |
Balanced Fund and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Gold
The main advantage of trading using opposite Balanced Fund and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, 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 Gold will offset losses from the drop in Gold's long position.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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