Correlation Between Global Gold and Equity Income
Can any of the company-specific risk be diversified away by investing in both Global Gold and Equity Income 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 Global Gold and Equity Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Equity Income Fund, you can compare the effects of market volatilities on Global Gold and Equity Income 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 Global Gold with a short position of Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Equity Income.
Diversification Opportunities for Global Gold and Equity Income
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Equity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income and Global Gold 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 Global Gold Fund are associated (or correlated) with Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Global Gold i.e., Global Gold and Equity Income go up and down completely randomly.
Pair Corralation between Global Gold and Equity Income
Assuming the 90 days horizon Global Gold Fund is expected to generate 3.1 times more return on investment than Equity Income. However, Global Gold is 3.1 times more volatile than Equity Income Fund. It trades about 0.14 of its potential returns per unit of risk. Equity Income Fund is currently generating about 0.19 per unit of risk. If you would invest 1,860 in Global Gold Fund on June 2, 2025 and sell it today you would earn a total of 287.00 from holding Global Gold Fund or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Equity Income Fund
Performance |
| Timeline |
| Global Gold Fund |
| Equity Income |
Global Gold and Equity Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Equity Income
The main advantage of trading using opposite Global Gold and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Equity Income 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 Equity Income will offset losses from the drop in Equity Income's long position.| Global Gold vs. Prudential High Yield | Global Gold vs. Federated High Yield | Global Gold vs. Msift High Yield | Global Gold vs. Janus High Yield Fund |
| Equity Income vs. Wilmington Diversified Income | Equity Income vs. Putnam Diversified Income | Equity Income vs. Brown Advisory Small Cap | Equity Income vs. Aqr Diversified Arbitrage |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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