Correlation Between Investec Emerging and Gold Bullion

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

By analyzing existing cross correlation between Investec Emerging Markets and The Gold Bullion, you can compare the effects of market volatilities on Investec Emerging and Gold Bullion 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 Investec Emerging with a short position of Gold Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Gold Bullion.

Diversification Opportunities for Investec Emerging and Gold Bullion

0.51

Correlation Coefficient

Investec Emerging  Gold Bullion

Very weak diversification

The 3 months correlation between Investec and Gold is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion and Investec Emerging 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 Investec Emerging Markets are associated (or correlated) with Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of Investec Emerging i.e., Investec Emerging and Gold Bullion go up and down completely randomly.

Pair Corralation between Investec Emerging and Gold Bullion

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 0.13 times more return on investment than Gold Bullion. However, Investec Emerging Markets is 7.47 times less risky than Gold Bullion. It trades about -0.26 of its potential returns per unit of risk. The Gold Bullion is currently generating about -0.24 per unit of risk. If you would invest  1,109  in Investec Emerging Markets on October 8, 2024 and sell it today you would lose (35.00) from holding Investec Emerging Markets or give up 3.16% of portfolio value over 90 days.

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

Investec Emerging Markets  vs.  The Gold Bullion

Investec Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investec Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Investec Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gold Bullion has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Investec Emerging and Gold Bullion

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

The idea behind Investec Emerging Markets and The Gold Bullion 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 CEOs Directory module to screen CEOs from public companies around the world.