Correlation Between Gold Portfolio and ZKB Gold

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

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

Diversification Opportunities for Gold Portfolio and ZKB Gold

0.92

Correlation Coefficient

Gold Portfolio  ZKB Gold

Almost no diversification

The 3 months correlation between Gold and ZKB is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gold Portfolio Fidelity and ZKB Gold ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Gold ETF and Gold Portfolio 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 Portfolio Fidelity are associated (or correlated) with ZKB Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Gold ETF has no effect on the direction of Gold Portfolio i.e., Gold Portfolio and ZKB Gold go up and down completely randomly.

Pair Corralation between Gold Portfolio and ZKB Gold

Assuming the 90 days horizon Gold Portfolio is expected to generate 1.17 times less return on investment than ZKB Gold. In addition to that, Gold Portfolio is 1.06 times more volatile than ZKB Gold ETF. It trades about 0.25 of its total potential returns per unit of risk. ZKB Gold ETF is currently generating about 0.31 per unit of volatility. If you would invest  203,000  in ZKB Gold ETF on January 24, 2024 and sell it today you would earn a total of  21,162  from holding ZKB Gold ETF or generate 10.42% return on investment over 90 days.

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

Gold Portfolio Fidelity  vs.  ZKB Gold ETF

Gold Portfolio Fidelity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Portfolio Fidelity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gold Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

ZKB Gold ETF

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZKB Gold ETF are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, ZKB Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Portfolio and ZKB Gold

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

The idea behind Gold Portfolio Fidelity and ZKB Gold ETF 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.