Correlation Between IBI Mutual and Gold Bond

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

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

Diversification Opportunities for IBI Mutual and Gold Bond

0.6

Correlation Coefficient

IBI Mutual  Gold Bond

Poor diversification

The 3 months correlation between IBI and Gold is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding IBI Mutual Funds and The Gold Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bond and IBI Mutual 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 IBI Mutual Funds are associated (or correlated) with Gold Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bond has no effect on the direction of IBI Mutual i.e., IBI Mutual and Gold Bond go up and down completely randomly.

Pair Corralation between IBI Mutual and Gold Bond

Assuming the 90 days trading horizon IBI Mutual is expected to generate 4.04 times less return on investment than Gold Bond. In addition to that, IBI Mutual is 1.15 times more volatile than The Gold Bond. It trades about 0.1 of its total potential returns per unit of risk. The Gold Bond is currently generating about 0.45 per unit of volatility. If you would invest  1,220,810  in The Gold Bond on September 26, 2024 and sell it today you would earn a total of  482,190  from holding The Gold Bond or generate 39.5% return on investment over 90 days.

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

IBI Mutual Funds  vs.  The Gold Bond

IBI Mutual Funds

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Mutual Funds are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, IBI Mutual may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gold Bond

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bond are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bond sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IBI Mutual and Gold Bond

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

The idea behind IBI Mutual Funds and The Gold Bond 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.