Correlation Between Global Gold and William Blair

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

Diversification Opportunities for Global Gold and William Blair

-0.73

Correlation Coefficient

Global Gold  William Blair

Pay attention - limited upside

The 3 months correlation between Global and William is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and William Blair Emerg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Emerg 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Emerg has no effect on the direction of Global Gold i.e., Global Gold and William Blair go up and down completely randomly.

Pair Corralation between Global Gold and William Blair

Assuming the 90 days horizon Global Gold Fund is expected to generate 1.47 times more return on investment than William Blair. However, Global Gold is 1.47 times more volatile than William Blair Emerg. It trades about 0.33 of its potential returns per unit of risk. William Blair Emerg 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  425.00  from holding Global Gold Fund or generate 36.54% return on investment over 90 days.

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

Global Gold Fund  vs.  William Blair Emerg

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.

William Blair Emerg

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Emerg has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 William Blair

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

The idea behind Global Gold Fund and William Blair Emerg 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.