Correlation Between Gold Portfolio and Deutsche Gold

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

By analyzing existing cross correlation between Gold Portfolio Fidelity and Deutsche Gold Precious, you can compare the effects of market volatilities on Gold Portfolio and Deutsche Gold 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 Portfolio with a short position of Deutsche Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Portfolio and Deutsche Gold.

Diversification Opportunities for Gold Portfolio and Deutsche Gold

0.95

Correlation Coefficient

Gold Portfolio  Deutsche Gold

Almost no diversification

The 3 months correlation between GOLD and Deutsche is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Gold Portfolio Fidelity and Deutsche Gold Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Gold Precious and Gold Portfolio 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 Portfolio Fidelity are associated (or correlated) with Deutsche Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Gold Precious has no effect on the direction of Gold Portfolio i.e., Gold Portfolio and Deutsche Gold go up and down completely randomly.

Pair Corralation between Gold Portfolio and Deutsche Gold

Assuming the 90 days horizon Gold Portfolio Fidelity is expected to generate 0.98 times more return on investment than Deutsche Gold. However, Gold Portfolio Fidelity is 1.02 times less risky than Deutsche Gold. It trades about 0.3 of its potential returns per unit of risk. Deutsche Gold Precious is currently generating about 0.24 per unit of risk. If you would invest  2,487  in Gold Portfolio Fidelity on December 21, 2024 and sell it today you would earn a total of  769.00  from holding Gold Portfolio Fidelity or generate 30.92% return on investment over 90 days.

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

Gold Portfolio Fidelity  vs.  Deutsche Gold Precious

Gold Portfolio Fidelity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Portfolio Fidelity are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gold Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Gold Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Gold Precious are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Deutsche Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Portfolio and Deutsche Gold

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

The idea behind Gold Portfolio Fidelity and Deutsche Gold Precious 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.