Correlation Between Gold Bullion and Investec Global

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

Diversification Opportunities for Gold Bullion and Investec Global

-0.01

Correlation Coefficient

Gold Bullion  Investec Global

Good diversification

The 3 months correlation between Gold and Investec is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Investec Global Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Global Franchise 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 Investec Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Global Franchise has no effect on the direction of Gold Bullion i.e., Gold Bullion and Investec Global go up and down completely randomly.

Pair Corralation between Gold Bullion and Investec Global

Assuming the 90 days horizon The Gold Bullion is expected to under-perform the Investec Global. In addition to that, Gold Bullion is 6.58 times more volatile than Investec Global Franchise. It trades about -0.24 of its total potential returns per unit of risk. Investec Global Franchise is currently generating about -0.18 per unit of volatility. If you would invest  1,803  in Investec Global Franchise on October 8, 2024 and sell it today you would lose (44.00) from holding Investec Global Franchise or give up 2.44% of portfolio value over 90 days.

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

The Gold Bullion  vs.  Investec Global Franchise

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.

Investec Global Franchise

Risk-Adjusted Performance

1 of 100

Insignificant

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

Pair Trading with Gold Bullion and Investec Global

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

The idea behind The Gold Bullion and Investec Global Franchise 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.