Correlation Between Quantified Managed and The Gold

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

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

Diversification Opportunities for Quantified Managed and The Gold

0.71

Correlation Coefficient

Quantified Managed  The Gold

Poor diversification

The 3 months correlation between Quantified and The is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Quantified Managed Income and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion and Quantified Managed 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 Quantified Managed Income 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 Quantified Managed i.e., Quantified Managed and The Gold go up and down completely randomly.

Pair Corralation between Quantified Managed and The Gold

Assuming the 90 days horizon Quantified Managed is expected to generate 8.86 times less return on investment than The Gold. But when comparing it to its historical volatility, Quantified Managed Income is 3.38 times less risky than The Gold. It trades about 0.11 of its potential returns per unit of risk. The Gold Bullion is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,979  in The Gold Bullion on December 30, 2024 and sell it today you would earn a total of  332.00  from holding The Gold Bullion or generate 16.78% return on investment over 90 days.

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

Quantified Managed Income  vs.  The Gold Bullion

Quantified Managed Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quantified Managed Income are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Quantified Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Bullion

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bullion are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, The Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quantified Managed and The Gold

The main advantage of trading using opposite Quantified Managed and The Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantified Managed 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 Quantified Managed Income 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.