Correlation Between Small Cap and Tocqueville Gold

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

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

Diversification Opportunities for Small Cap and Tocqueville Gold

-0.23

Correlation Coefficient

Small Cap  Tocqueville Gold

Very good diversification

The 3 months correlation between Small and Tocqueville is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and The Tocqueville Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tocqueville Gold and Small Cap 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 Small Cap Stock are associated (or correlated) with Tocqueville Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tocqueville Gold has no effect on the direction of Small Cap i.e., Small Cap and Tocqueville Gold go up and down completely randomly.

Pair Corralation between Small Cap and Tocqueville Gold

If you would invest  1,165  in Small Cap Stock on September 14, 2024 and sell it today you would earn a total of  339.00  from holding Small Cap Stock or generate 29.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.25%
Values	Daily Returns

Small Cap Stock  vs.  The Tocqueville Gold

Small Cap Stock

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Stock are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tocqueville Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Small Cap and Tocqueville Gold

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

The idea behind Small Cap Stock and The Tocqueville Gold 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.