Correlation Between 2028 Investment and Precious Metals

Can any of the company-specific risk be diversified away by investing in both 2028 Investment and Precious Metals 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 2028 Investment and Precious Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 2028 Investment Grade and Precious Metals And, you can compare the effects of market volatilities on 2028 Investment and Precious Metals 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 2028 Investment with a short position of Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2028 Investment and Precious Metals.

Diversification Opportunities for 2028 Investment and Precious Metals

0.2

Correlation Coefficient

2028 Investment  Precious Metals

Modest diversification

The 3 months correlation between 2028 and Precious is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding 2028 Investment Grade and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And and 2028 Investment 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 2028 Investment Grade are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of 2028 Investment i.e., 2028 Investment and Precious Metals go up and down completely randomly.

Pair Corralation between 2028 Investment and Precious Metals

Assuming the 90 days trading horizon 2028 Investment Grade is expected to generate 0.34 times more return on investment than Precious Metals. However, 2028 Investment Grade is 2.96 times less risky than Precious Metals. It trades about -0.06 of its potential returns per unit of risk. Precious Metals And is currently generating about -0.03 per unit of risk. If you would invest  1,045  in 2028 Investment Grade on September 30, 2024 and sell it today you would lose (29.00) from holding 2028 Investment Grade or give up 2.78% of portfolio value over 90 days.

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

2028 Investment Grade  vs.  Precious Metals And

2028 Investment Grade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 2028 Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, 2028 Investment is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 2028 Investment and Precious Metals

The main advantage of trading using opposite 2028 Investment and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2028 Investment position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.

The idea behind 2028 Investment Grade and Precious Metals And 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.