Correlation Between Precious Metals and Salient Alternative
Can any of the company-specific risk be diversified away by investing in both Precious Metals and Salient Alternative 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 Salient Alternative 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 Salient Alternative Beta, you can compare the effects of market volatilities on Precious Metals and Salient Alternative 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 Salient Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Salient Alternative.
Diversification Opportunities for Precious Metals and Salient Alternative
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Precious and Salient is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Salient Alternative Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Alternative Beta 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 Salient Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Alternative Beta has no effect on the direction of Precious Metals i.e., Precious Metals and Salient Alternative go up and down completely randomly.
Pair Corralation between Precious Metals and Salient Alternative
Assuming the 90 days horizon Precious Metals And is expected to under-perform the Salient Alternative. In addition to that, Precious Metals is 2.92 times more volatile than Salient Alternative Beta. It trades about -0.19 of its total potential returns per unit of risk. Salient Alternative Beta is currently generating about 0.22 per unit of volatility. If you would invest 1,190 in Salient Alternative Beta on August 29, 2024 and sell it today you would earn a total of 41.00 from holding Salient Alternative Beta or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Precious Metals And vs. Salient Alternative Beta
Performance |
| Timeline |
| Precious Metals And |
| Salient Alternative Beta |
Precious Metals and Salient Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Salient Alternative
The main advantage of trading using opposite Precious Metals and Salient Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals position performs unexpectedly, Salient Alternative 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 Salient Alternative will offset losses from the drop in Salient Alternative's long position.| Precious Metals vs. First Eagle Gold | Precious Metals vs. First Eagle Gold | Precious Metals vs. Oppenheimer Gold Special | Precious Metals vs. Aquagold International |
| Salient Alternative vs. Gabelli Gold Fund | Salient Alternative vs. Precious Metals And | Salient Alternative vs. Gamco Global Gold | Salient Alternative vs. Great West Goldman Sachs |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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