Correlation Between Royce Opportunity and Precious Metals

Can any of the company-specific risk be diversified away by investing in both Royce Opportunity and Precious Metals 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 Royce Opportunity and Precious Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Royce Opportunity Fund and Precious Metals And, you can compare the effects of market volatilities on Royce Opportunity and Precious Metals 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 Royce Opportunity with a short position of Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Precious Metals.

Diversification Opportunities for Royce Opportunity and Precious Metals

-0.62

Correlation Coefficient

Royce Opportunity  Precious Metals

Excellent diversification

The 3 months correlation between Royce and Precious is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And and Royce Opportunity 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 Royce Opportunity Fund are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Precious Metals go up and down completely randomly.

Pair Corralation between Royce Opportunity and Precious Metals

Assuming the 90 days horizon Royce Opportunity Fund is expected to generate 0.95 times more return on investment than Precious Metals. However, Royce Opportunity Fund is 1.05 times less risky than Precious Metals. It trades about 0.03 of its potential returns per unit of risk. Precious Metals And is currently generating about -0.02 per unit of risk. If you would invest  1,620  in Royce Opportunity Fund on September 18, 2024 and sell it today you would earn a total of  40.00  from holding Royce Opportunity Fund or generate 2.47% return on investment over 90 days.

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

Royce Opportunity Fund  vs.  Precious Metals And

Royce Opportunity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Royce Opportunity Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Royce Opportunity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Precious Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Royce Opportunity and Precious Metals

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

The idea behind Royce Opportunity Fund and Precious Metals And 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.