Correlation Between The Gold and Performance Trust

Can any of the company-specific risk be diversified away by investing in both The Gold and Performance Trust 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 Performance Trust 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 Performance Trust Credit, you can compare the effects of market volatilities on The Gold and Performance Trust 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 Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Performance Trust.

Diversification Opportunities for The Gold and Performance Trust

-0.11

Correlation Coefficient

The Gold  Performance Trust

Good diversification

The 3 months correlation between The and Performance is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Performance Trust Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust Credit 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 Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust Credit has no effect on the direction of The Gold i.e., The Gold and Performance Trust go up and down completely randomly.

Pair Corralation between The Gold and Performance Trust

Assuming the 90 days horizon The Gold is expected to generate 1.02 times less return on investment than Performance Trust. In addition to that, The Gold is 5.71 times more volatile than Performance Trust Credit. It trades about 0.01 of its total potential returns per unit of risk. Performance Trust Credit is currently generating about 0.09 per unit of volatility. If you would invest  886.00  in Performance Trust Credit on October 27, 2024 and sell it today you would earn a total of  9.00  from holding Performance Trust Credit or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

The Gold Bullion  vs.  Performance Trust Credit

Gold Bullion

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bullion are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, The Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Performance Trust Credit

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Trust Credit are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Performance Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Gold and Performance Trust

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

The idea behind The Gold Bullion and Performance Trust Credit 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.