Correlation Between Fuller Thaler and The Gold

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

By analyzing existing cross correlation between Fuller Thaler Behavioral and The Gold Bullion, you can compare the effects of market volatilities on Fuller Thaler and The 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 Fuller Thaler with a short position of The Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuller Thaler and The Gold.

Diversification Opportunities for Fuller Thaler and The Gold

-0.02

Correlation Coefficient

Fuller Thaler  The Gold

Good diversification

The 3 months correlation between Fuller and The is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fuller Thaler Behavioral and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion and Fuller Thaler 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 Fuller Thaler Behavioral are associated (or correlated) with The Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of Fuller Thaler i.e., Fuller Thaler and The Gold go up and down completely randomly.

Pair Corralation between Fuller Thaler and The Gold

Assuming the 90 days horizon Fuller Thaler Behavioral is expected to generate 0.3 times more return on investment than The Gold. However, Fuller Thaler Behavioral is 3.38 times less risky than The Gold. It trades about -0.1 of its potential returns per unit of risk. The Gold Bullion is currently generating about -0.24 per unit of risk. If you would invest  4,807  in Fuller Thaler Behavioral on October 10, 2024 and sell it today you would lose (141.00) from holding Fuller Thaler Behavioral or give up 2.93% of portfolio value over 90 days.

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

Fuller Thaler Behavioral  vs.  The Gold Bullion

Fuller Thaler Behavioral

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuller Thaler Behavioral are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fuller Thaler may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gold Bullion 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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Fuller Thaler and The Gold

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

The idea behind Fuller Thaler Behavioral and The Gold Bullion 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.