Correlation Between Small Cap and Gold And

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

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

Diversification Opportunities for Small Cap and Gold And

-0.38

Correlation Coefficient

Small Cap  Gold And

Very good diversification

The 3 months correlation between Small and Gold is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock 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 Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and Gold And go up and down completely randomly.

Pair Corralation between Small Cap and Gold And

Assuming the 90 days horizon Small Cap Stock is expected to under-perform the Gold And. But the mutual fund apears to be less risky and, when comparing its historical volatility, Small Cap Stock is 1.45 times less risky than Gold And. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Gold And Precious is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,154  in Gold And Precious on December 21, 2024 and sell it today you would earn a total of  330.00  from holding Gold And Precious or generate 28.6% return on investment over 90 days.

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

Small Cap Stock  vs.  Gold And Precious

Small Cap Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Cap Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 21 (%) 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 Small Cap and Gold And

The main advantage of trading using opposite Small Cap and Gold And positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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 Small Cap Stock 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.