Correlation Between Banking Fund and Precious Metals
Can any of the company-specific risk be diversified away by investing in both Banking Fund 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 Banking Fund and Precious Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banking Fund Class and Precious Metals Fund, you can compare the effects of market volatilities on Banking Fund 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 Banking Fund with a short position of Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Precious Metals.
Diversification Opportunities for Banking Fund and Precious Metals
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banking and Precious is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Class and Precious Metals Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals and Banking Fund 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 Banking Fund Class 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 has no effect on the direction of Banking Fund i.e., Banking Fund and Precious Metals go up and down completely randomly.
Pair Corralation between Banking Fund and Precious Metals
Assuming the 90 days horizon Banking Fund is expected to generate 1.99 times less return on investment than Precious Metals. But when comparing it to its historical volatility, Banking Fund Class is 1.64 times less risky than Precious Metals. It trades about 0.18 of its potential returns per unit of risk. Precious Metals Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 15,455 in Precious Metals Fund on June 6, 2025 and sell it today you would earn a total of 3,922 from holding Precious Metals Fund or generate 25.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banking Fund Class vs. Precious Metals Fund
Performance |
| Timeline |
| Banking Fund Class |
| Precious Metals |
Banking Fund and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banking Fund and Precious Metals
The main advantage of trading using opposite Banking Fund and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Fund 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.| Banking Fund vs. Tiaa Cref Lifestyle Conservative | Banking Fund vs. Massmutual Premier Diversified | Banking Fund vs. Madison Diversified Income | Banking Fund vs. Blackrock Conservative Prprdptfinstttnl |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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