Correlation Between Gold And and Smallcap

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

By analyzing existing cross correlation between Gold And Precious and Smallcap Sp 600, you can compare the effects of market volatilities on Gold And and Smallcap 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 And with a short position of Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold And and Smallcap.

Diversification Opportunities for Gold And and Smallcap

0.22

Correlation Coefficient

Gold And  Smallcap

Modest diversification

The 3 months correlation between Gold and Smallcap is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Smallcap Sp 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Sp 600 and Gold And 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 Gold And Precious are associated (or correlated) with Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Sp 600 has no effect on the direction of Gold And i.e., Gold And and Smallcap go up and down completely randomly.

Pair Corralation between Gold And and Smallcap

Assuming the 90 days horizon Gold And Precious is expected to generate 1.44 times more return on investment than Smallcap. However, Gold And is 1.44 times more volatile than Smallcap Sp 600. It trades about 0.17 of its potential returns per unit of risk. Smallcap Sp 600 is currently generating about 0.16 per unit of risk. If you would invest  1,688  in Gold And Precious on May 25, 2025 and sell it today you would earn a total of  293.00  from holding Gold And Precious or generate 17.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Gold And Precious  vs.  Smallcap Sp 600

Gold And Precious

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold And Precious are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gold And showed solid returns over the last few months and may actually be approaching a breakup point.

Smallcap Sp 600

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Sp 600 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Smallcap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Gold And and Smallcap

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

The idea behind Gold And Precious and Smallcap Sp 600 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.