Correlation Between Moderately Conservative and The Gold

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

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

Diversification Opportunities for Moderately Conservative and The Gold

0.26

Correlation Coefficient

Moderately Conservative  The Gold

Modest diversification

The 3 months correlation between Moderately and The is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Moderately Servative Balanced and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion and Moderately Conservative 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 Moderately Servative Balanced are associated (or correlated) with The 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 Bullion has no effect on the direction of Moderately Conservative i.e., Moderately Conservative and The Gold go up and down completely randomly.

Pair Corralation between Moderately Conservative and The Gold

Assuming the 90 days horizon Moderately Servative Balanced is expected to generate 0.43 times more return on investment than The Gold. However, Moderately Servative Balanced is 2.34 times less risky than The Gold. It trades about 0.18 of its potential returns per unit of risk. The Gold Bullion is currently generating about 0.05 per unit of risk. If you would invest  1,092  in Moderately Servative Balanced on May 19, 2025 and sell it today you would earn a total of  53.00  from holding Moderately Servative Balanced or generate 4.85% return on investment over 90 days.

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

Moderately Servative Balanced  vs.  The Gold Bullion

Moderately Conservative

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moderately Servative Balanced are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Moderately Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Bullion

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bullion are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, The Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moderately Conservative and The Gold

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

The idea behind Moderately Servative Balanced and The Gold Bullion 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.