Correlation Between Gold And and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Gold And and Emerging Markets 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 Gold And and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold And Precious and Emerging Markets Small, you can compare the effects of market volatilities on Gold And and Emerging Markets 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 Gold And with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold And and Emerging Markets.
Diversification Opportunities for Gold And and Emerging Markets
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Emerging is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Emerging Markets Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Small and Gold And 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 Gold And Precious are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Small has no effect on the direction of Gold And i.e., Gold And and Emerging Markets go up and down completely randomly.
Pair Corralation between Gold And and Emerging Markets
Assuming the 90 days horizon Gold And Precious is expected to under-perform the Emerging Markets. In addition to that, Gold And is 3.0 times more volatile than Emerging Markets Small. It trades about -0.17 of its total potential returns per unit of risk. Emerging Markets Small is currently generating about 0.02 per unit of volatility. If you would invest 1,504 in Emerging Markets Small on September 5, 2024 and sell it today you would earn a total of 4.00 from holding Emerging Markets Small or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold And Precious vs. Emerging Markets Small
Performance |
| Timeline |
| Gold And Precious |
| Emerging Markets Small |
Gold And and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold And and Emerging Markets
The main advantage of trading using opposite Gold And and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold And position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Gold And vs. Western Asset High | Gold And vs. Pace High Yield | Gold And vs. Gmo High Yield | Gold And vs. Nuveen High Income |
| Emerging Markets vs. Gold And Precious | Emerging Markets vs. Fidelity Advisor Gold | Emerging Markets vs. First Eagle Gold | Emerging Markets vs. Global Gold 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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