Correlation Between Gold And and Select Equity

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

Diversification Opportunities for Gold And and Select Equity

-0.37

Correlation Coefficient

Gold And  Select Equity

Very good diversification

The 3 months correlation between Gold and Select is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Select Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Equity 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 Select Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Equity has no effect on the direction of Gold And i.e., Gold And and Select Equity go up and down completely randomly.

Pair Corralation between Gold And and Select Equity

Assuming the 90 days horizon Gold And Precious is expected to generate 1.65 times more return on investment than Select Equity. However, Gold And is 1.65 times more volatile than Select Equity Fund. It trades about 0.29 of its potential returns per unit of risk. Select Equity Fund is currently generating about -0.09 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Gold And Precious  vs.  Select Equity Fund

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.

Select Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Equity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Select Equity 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 Select Equity

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

The idea behind Gold And Precious and Select Equity Fund 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.