Correlation Between Global Gold and Turner Emerging

Can any of the company-specific risk be diversified away by investing in both Global Gold and Turner Emerging 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 Turner Emerging 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 Turner Emerging Growth, you can compare the effects of market volatilities on Global Gold and Turner Emerging 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 Turner Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Turner Emerging.

Diversification Opportunities for Global Gold and Turner Emerging

-0.53

Correlation Coefficient

Global Gold  Turner Emerging

Excellent diversification

The 3 months correlation between Global and Turner is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Turner Emerging Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turner Emerging Growth 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 Turner Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turner Emerging Growth has no effect on the direction of Global Gold i.e., Global Gold and Turner Emerging go up and down completely randomly.

Pair Corralation between Global Gold and Turner Emerging

Assuming the 90 days horizon Global Gold Fund is expected to generate 1.22 times more return on investment than Turner Emerging. However, Global Gold is 1.22 times more volatile than Turner Emerging Growth. It trades about 0.33 of its potential returns per unit of risk. Turner Emerging Growth is currently generating about -0.11 per unit of risk. If you would invest  1,163  in Global Gold Fund on December 29, 2024 and sell it today you would earn a total of  421.00  from holding Global Gold Fund or generate 36.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Global Gold Fund  vs.  Turner Emerging Growth

Global Gold Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Gold Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Turner Emerging Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Turner Emerging Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Global Gold and Turner Emerging

The main advantage of trading using opposite Global Gold and Turner Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Turner Emerging 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 Turner Emerging will offset losses from the drop in Turner Emerging's long position.

The idea behind Global Gold Fund and Turner Emerging Growth 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.