Correlation Between The Gold and Muirfield Fund

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

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

Diversification Opportunities for The Gold and Muirfield Fund

0.63

Correlation Coefficient

The Gold  Muirfield Fund

Poor diversification

The 3 months correlation between The and Muirfield is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Muirfield Fund Adviser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muirfield Fund Adviser and The Gold 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 The Gold Bullion are associated (or correlated) with Muirfield Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muirfield Fund Adviser has no effect on the direction of The Gold i.e., The Gold and Muirfield Fund go up and down completely randomly.

Pair Corralation between The Gold and Muirfield Fund

Assuming the 90 days horizon The Gold Bullion is expected to under-perform the Muirfield Fund. In addition to that, The Gold is 1.53 times more volatile than Muirfield Fund Adviser. It trades about -0.12 of its total potential returns per unit of risk. Muirfield Fund Adviser is currently generating about -0.11 per unit of volatility. If you would invest  1,078  in Muirfield Fund Adviser on October 10, 2024 and sell it today you would lose (139.00) from holding Muirfield Fund Adviser or give up 12.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

The Gold Bullion  vs.  Muirfield Fund Adviser

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.

Muirfield Fund Adviser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Muirfield Fund Adviser 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 basic 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 The Gold and Muirfield Fund

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

The idea behind The Gold Bullion and Muirfield Fund Adviser 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.