Correlation Between Precious Metals and Select International
Can any of the company-specific risk be diversified away by investing in both Precious Metals and Select International 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 Select International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals And and Select International Equity, you can compare the effects of market volatilities on Precious Metals and Select International 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 Select International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Select International.
Diversification Opportunities for Precious Metals and Select International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Precious and Select is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Select International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select International 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 And are associated (or correlated) with Select International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select International has no effect on the direction of Precious Metals i.e., Precious Metals and Select International go up and down completely randomly.
Pair Corralation between Precious Metals and Select International
Assuming the 90 days horizon Precious Metals is expected to generate 1.14 times less return on investment than Select International. In addition to that, Precious Metals is 2.19 times more volatile than Select International Equity. It trades about 0.02 of its total potential returns per unit of risk. Select International Equity is currently generating about 0.04 per unit of volatility. If you would invest 949.00 in Select International Equity on August 29, 2024 and sell it today you would earn a total of 114.00 from holding Select International Equity or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals And vs. Select International Equity
Performance |
| Timeline |
| Precious Metals And |
| Select International |
Precious Metals and Select International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Select International
The main advantage of trading using opposite Precious Metals and Select International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals position performs unexpectedly, Select International 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 Select International will offset losses from the drop in Select International's long position.| Precious Metals vs. Emerging Markets Fund | Precious Metals vs. High Income Fund | Precious Metals vs. Government Securities Fund | Precious Metals vs. Growth Fund Growth |
| Select International vs. International Developed Markets | Select International vs. Global Real Estate | Select International vs. Global Real Estate | Select International vs. Global Real Estate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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