Correlation Between Europac Gold and Iaadx

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

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

Diversification Opportunities for Europac Gold and Iaadx

0.85

Correlation Coefficient

Europac Gold  Iaadx

Very poor diversification

The 3 months correlation between Europac and Iaadx is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Iaadx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iaadx and Europac 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 Europac Gold Fund are associated (or correlated) with Iaadx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iaadx has no effect on the direction of Europac Gold i.e., Europac Gold and Iaadx go up and down completely randomly.

Pair Corralation between Europac Gold and Iaadx

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Iaadx. In addition to that, Europac Gold is 13.39 times more volatile than Iaadx. It trades about -0.06 of its total potential returns per unit of risk. Iaadx is currently generating about 0.2 per unit of volatility. If you would invest  929.00  in Iaadx on May 5, 2025 and sell it today you would earn a total of  5.00  from holding Iaadx or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Europac Gold Fund  vs.  Iaadx

Europac Gold

Risk-Adjusted Performance

OK

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

Iaadx

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Iaadx are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Iaadx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europac Gold and Iaadx

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

The idea behind Europac Gold Fund and Iaadx 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.