Correlation Between Global Gold and Vy T

Can any of the company-specific risk be diversified away by investing in both Global Gold and Vy T 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 Global Gold and Vy T into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Gold Fund and Vy T Rowe, you can compare the effects of market volatilities on Global Gold and Vy T 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 Global Gold with a short position of Vy T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Vy T.

Diversification Opportunities for Global Gold and Vy T

-0.59

Correlation Coefficient

Global Gold  Vy T

Excellent diversification

The 3 months correlation between Global and IAXIX is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Vy T Rowe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy T Rowe and Global 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 Global Gold Fund are associated (or correlated) with Vy T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy T Rowe has no effect on the direction of Global Gold i.e., Global Gold and Vy T go up and down completely randomly.

Pair Corralation between Global Gold and Vy T

Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Vy T. In addition to that, Global Gold is 1.47 times more volatile than Vy T Rowe. It trades about -0.28 of its total potential returns per unit of risk. Vy T Rowe is currently generating about 0.13 per unit of volatility. If you would invest  1,094  in Vy T Rowe on September 22, 2024 and sell it today you would earn a total of  76.00  from holding Vy T Rowe or generate 6.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Global Gold Fund  vs.  Vy T Rowe

Global Gold Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vy T Rowe

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vy T Rowe are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vy T may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Gold and Vy T

The main advantage of trading using opposite Global Gold and Vy T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Vy T 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 Vy T will offset losses from the drop in Vy T's long position.

The idea behind Global Gold Fund and Vy T Rowe pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.