Correlation Between Gold Bullion and Europac Gold

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

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

Diversification Opportunities for Gold Bullion and Europac Gold

0.58

Correlation Coefficient

Gold Bullion  Europac Gold

Very weak diversification

The 3 months correlation between Gold and Europac is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Gold Bullion 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 The Gold Bullion are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Gold Bullion i.e., Gold Bullion and Europac Gold go up and down completely randomly.

Pair Corralation between Gold Bullion and Europac Gold

Assuming the 90 days horizon The Gold Bullion is expected to under-perform the Europac Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Gold Bullion is 1.52 times less risky than Europac Gold. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Europac Gold Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,227  in Europac Gold Fund on May 5, 2025 and sell it today you would earn a total of  125.00  from holding Europac Gold Fund or generate 10.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Gold Bullion  vs.  Europac Gold Fund

Gold Bullion

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Gold Bullion and Europac Gold

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

The idea behind The Gold Bullion and Europac Gold Fund 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.