Correlation Between Precious Metals and High Income
Can any of the company-specific risk be diversified away by investing in both Precious Metals and High Income 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 High Income 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 High Income Fund, you can compare the effects of market volatilities on Precious Metals and High Income 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 High Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and High Income.
Diversification Opportunities for Precious Metals and High Income
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precious and High is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and High Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Income Fund 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 High Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Income Fund has no effect on the direction of Precious Metals i.e., Precious Metals and High Income go up and down completely randomly.
Pair Corralation between Precious Metals and High Income
Assuming the 90 days horizon Precious Metals And is expected to generate 10.48 times more return on investment than High Income. However, Precious Metals is 10.48 times more volatile than High Income Fund. It trades about 0.28 of its potential returns per unit of risk. High Income Fund is currently generating about 0.19 per unit of risk. If you would invest 1,950 in Precious Metals And on October 21, 2024 and sell it today you would earn a total of 134.00 from holding Precious Metals And or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals And vs. High Income Fund
Performance |
| Timeline |
| Precious Metals And |
| High Income Fund |
Precious Metals and High Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and High Income
The main advantage of trading using opposite Precious Metals and High Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals position performs unexpectedly, High Income 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 High Income will offset losses from the drop in High Income's long position.| Precious Metals vs. Altegris Futures Evolution | Precious Metals vs. Aqr Managed Futures | Precious Metals vs. Guidepath Managed Futures | Precious Metals vs. Short Duration Inflation |
| High Income vs. Sp Midcap Index | High Income vs. Fidelity New Markets | High Income vs. Ab All Market | High Income vs. Locorr Market Trend |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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