Correlation Between Alternative Asset and Gold
Can any of the company-specific risk be diversified away by investing in both Alternative Asset and 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 Alternative Asset and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Asset Allocation and Gold And Precious, you can compare the effects of market volatilities on Alternative Asset and 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 Alternative Asset with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Asset and Gold.
Diversification Opportunities for Alternative Asset and Gold
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alternative and Gold is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Asset Allocation and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Alternative Asset 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 Alternative Asset Allocation are associated (or correlated) with 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 And Precious has no effect on the direction of Alternative Asset i.e., Alternative Asset and Gold go up and down completely randomly.
Pair Corralation between Alternative Asset and Gold
Assuming the 90 days horizon Alternative Asset is expected to generate 1.02 times less return on investment than Gold. But when comparing it to its historical volatility, Alternative Asset Allocation is 9.01 times less risky than Gold. It trades about 0.12 of its potential returns per unit of risk. Gold And Precious is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,277 in Gold And Precious on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Gold And Precious or generate 0.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alternative Asset Allocation vs. Gold And Precious
Performance |
Timeline |
Alternative Asset |
Gold And Precious |
Alternative Asset and Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alternative Asset and Gold
The main advantage of trading using opposite Alternative Asset and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Asset position performs unexpectedly, 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 Gold will offset losses from the drop in Gold's long position.Alternative Asset vs. Blackrock Alternative Capital | Alternative Asset vs. Aqr Style Premia | Alternative Asset vs. Goldman Sachs Absolute | Alternative Asset vs. Aquagold International |
Gold vs. Artisan Thematic Fund | Gold vs. Auer Growth Fund | Gold vs. Balanced Fund Investor | Gold vs. Nasdaq 100 Index Fund |
Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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