Correlation Between Gold And and Mid Capitalization

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

Diversification Opportunities for Gold And and Mid Capitalization

-0.41

Correlation Coefficient

Gold And  Mid Capitalization

Very good diversification

The 3 months correlation between Gold and Mid is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Mid Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Capitalization 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 Mid Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Capitalization has no effect on the direction of Gold And i.e., Gold And and Mid Capitalization go up and down completely randomly.

Pair Corralation between Gold And and Mid Capitalization

Assuming the 90 days horizon Gold And Precious is expected to generate 1.5 times more return on investment than Mid Capitalization. However, Gold And is 1.5 times more volatile than Mid Capitalization Portfolio. It trades about 0.27 of its potential returns per unit of risk. Mid Capitalization Portfolio is currently generating about -0.07 per unit of risk. If you would invest  1,146  in Gold And Precious on December 27, 2024 and sell it today you would earn a total of  354.00  from holding Gold And Precious or generate 30.89% return on investment over 90 days.

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

Gold And Precious  vs.  Mid Capitalization Portfolio

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.

Mid Capitalization

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Gold And Precious and Mid Capitalization Portfolio 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.