Correlation Between Gold and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Gold and Pear Tree 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 Pear Tree 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 Pear Tree Essex, you can compare the effects of market volatilities on Gold and Pear Tree 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 with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold and Pear Tree.
Diversification Opportunities for Gold and Pear Tree
Significant diversification
The 3 months correlation between Gold and Pear is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Pear Tree Essex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Essex and Gold 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Essex has no effect on the direction of Gold i.e., Gold and Pear Tree go up and down completely randomly.
Pair Corralation between Gold and Pear Tree
Assuming the 90 days horizon Gold And Precious is expected to generate 1.3 times more return on investment than Pear Tree. However, Gold is 1.3 times more volatile than Pear Tree Essex. It trades about 0.05 of its potential returns per unit of risk. Pear Tree Essex is currently generating about -0.01 per unit of risk. If you would invest 1,009 in Gold And Precious on September 12, 2024 and sell it today you would earn a total of 275.00 from holding Gold And Precious or generate 27.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Gold And Precious vs. Pear Tree Essex
Performance |
| Timeline |
| Gold And Precious |
| Pear Tree Essex |
Gold and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold and Pear Tree
The main advantage of trading using opposite Gold and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Gold vs. Artisan Thematic Fund | Gold vs. Auer Growth Fund | Gold vs. Balanced Fund Investor | Gold vs. Nasdaq 100 Index Fund |
| Pear Tree vs. Third Avenue Real | Pear Tree vs. Third Avenue Small Cap | Pear Tree vs. Smead Value Fund | Pear Tree vs. Baron Focused Growth |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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