Correlation Between Diversified Bond and Gold
Can any of the company-specific risk be diversified away by investing in both Diversified Bond and 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 Diversified Bond and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Bond Fund and Gold And Precious, you can compare the effects of market volatilities on Diversified Bond and 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 Diversified Bond with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Bond and Gold.
Diversification Opportunities for Diversified Bond and Gold
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diversified and Gold is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Bond Fund and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Diversified Bond 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 Diversified Bond Fund are associated (or correlated) with Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Diversified Bond i.e., Diversified Bond and Gold go up and down completely randomly.
Pair Corralation between Diversified Bond and Gold
Assuming the 90 days horizon Diversified Bond is expected to generate 25.89 times less return on investment than Gold. But when comparing it to its historical volatility, Diversified Bond Fund is 13.61 times less risky than Gold. It trades about 0.09 of its potential returns per unit of risk. Gold And Precious is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,173 in Gold And Precious on September 4, 2025 and sell it today you would earn a total of 644.00 from holding Gold And Precious or generate 29.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Bond Fund vs. Gold And Precious
Performance |
| Timeline |
| Diversified Bond |
| Gold And Precious |
Diversified Bond and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Bond and Gold
The main advantage of trading using opposite Diversified Bond and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Bond position performs unexpectedly, 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 Gold will offset losses from the drop in Gold's long position.| Diversified Bond vs. Jennison Natural Resources | Diversified Bond vs. Invesco Energy Fund | Diversified Bond vs. Blackrock All Cap Energy | Diversified Bond vs. Calvert Global Energy |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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