Correlation Between Gold Bullion and Xtrackers MSCI

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

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

Diversification Opportunities for Gold Bullion and Xtrackers MSCI

0.0

Correlation Coefficient

Gold Bullion  Xtrackers MSCI

Pay attention - limited upside

The 3 months correlation between Gold and Xtrackers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bullion Securities and Xtrackers MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Europe and Gold Bullion 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 Bullion Securities are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Europe has no effect on the direction of Gold Bullion i.e., Gold Bullion and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Gold Bullion and Xtrackers MSCI

If you would invest  21,245  in Gold Bullion Securities on September 17, 2024 and sell it today you would earn a total of  2,052  from holding Gold Bullion Securities or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Gold Bullion Securities  vs.  Xtrackers MSCI Europe

Gold Bullion Securities

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bullion Securities are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bullion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Xtrackers MSCI Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers MSCI Europe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gold Bullion and Xtrackers MSCI

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

The idea behind Gold Bullion Securities and Xtrackers MSCI Europe 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.