Correlation Between Horizons USD and CI Gold

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

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

Diversification Opportunities for Horizons USD and CI Gold

-0.79

Correlation Coefficient

Horizons USD  CI Gold

Pay attention - limited upside

The 3 months correlation between Horizons and CGXF is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Horizons USD Cash and CI Gold Giants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Giants and Horizons USD 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 Horizons USD Cash are associated (or correlated) with CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Giants has no effect on the direction of Horizons USD i.e., Horizons USD and CI Gold go up and down completely randomly.

Pair Corralation between Horizons USD and CI Gold

Assuming the 90 days trading horizon Horizons USD Cash is expected to under-perform the CI Gold. But the etf apears to be less risky and, when comparing its historical volatility, Horizons USD Cash is 2.27 times less risky than CI Gold. The etf trades about -0.22 of its potential returns per unit of risk. The CI Gold Giants is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,088  in CI Gold Giants on March 19, 2024 and sell it today you would lose (41.00) from holding CI Gold Giants or give up 3.77% of portfolio value over 90 days.

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

Horizons USD Cash  vs.  CI Gold Giants

Horizons USD Cash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizons USD Cash has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Horizons USD is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CI Gold Giants

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Giants are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Horizons USD and CI Gold

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

The idea behind Horizons USD Cash and CI Gold Giants 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.