Correlation Between Gold and Steward Funds

Can any of the company-specific risk be diversified away by investing in both Gold and Steward Funds 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 Steward Funds 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 Steward Funds , you can compare the effects of market volatilities on Gold and Steward Funds 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 with a short position of Steward Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold and Steward Funds.

Diversification Opportunities for Gold and Steward Funds

0.56

Correlation Coefficient

Gold  Steward Funds

Very weak diversification

The 3 months correlation between Gold and Steward is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Steward Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Funds and Gold 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 Steward Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Funds has no effect on the direction of Gold i.e., Gold and Steward Funds go up and down completely randomly.

Pair Corralation between Gold and Steward Funds

Assuming the 90 days horizon Gold is expected to generate 1.02 times less return on investment than Steward Funds. In addition to that, Gold is 2.68 times more volatile than Steward Funds . It trades about 0.02 of its total potential returns per unit of risk. Steward Funds is currently generating about 0.06 per unit of volatility. If you would invest  2,910  in Steward Funds on December 4, 2024 and sell it today you would earn a total of  21.00  from holding Steward Funds or generate 0.72% return on investment over 90 days.

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

Gold And Precious  vs.  Steward Funds

Gold And Precious

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gold And Precious are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Steward Funds

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Gold And Precious and Steward Funds 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.