Correlation Between Gold Bullion and Gold And

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

Diversification Opportunities for Gold Bullion and Gold And

0.93

Correlation Coefficient

Gold Bullion  Gold And

Almost no diversification

The 3 months correlation between Gold and Gold is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion 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 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 The Gold Bullion are associated (or correlated) with Gold And. 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 Gold Bullion i.e., Gold Bullion and Gold And go up and down completely randomly.

Pair Corralation between Gold Bullion and Gold And

Assuming the 90 days horizon Gold Bullion is expected to generate 1.5 times less return on investment than Gold And. But when comparing it to its historical volatility, The Gold Bullion is 1.89 times less risky than Gold And. It trades about 0.29 of its potential returns per unit of risk. Gold And Precious is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,143  in Gold And Precious on December 19, 2024 and sell it today you would earn a total of  281.00  from holding Gold And Precious or generate 24.58% return on investment over 90 days.

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

The Gold Bullion  vs.  Gold And Precious

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, Gold Bullion showed solid returns over the last few months and may actually be approaching a breakup point.

Gold And Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold And Precious are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gold And showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Bullion and Gold And

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

The idea behind The Gold Bullion and Gold And Precious 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.