Correlation Between Gold And and Capital World

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

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

Diversification Opportunities for Gold And and Capital World

0.43

Correlation Coefficient

Gold And  Capital World

Very weak diversification

The 3 months correlation between Gold and Capital is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth and Gold And 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 Gold And Precious are associated (or correlated) with Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of Gold And i.e., Gold And and Capital World go up and down completely randomly.

Pair Corralation between Gold And and Capital World

If you would invest  1,136  in Gold And Precious on December 28, 2024 and sell it today you would earn a total of  382.00  from holding Gold And Precious or generate 33.63% return on investment over 90 days.

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

Gold And Precious  vs.  Capital World Growth

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 22 (%) 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.

Capital World Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital World Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Capital World 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 And and Capital World

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

The idea behind Gold And Precious and Capital World Growth 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.