Correlation Between Moneta Gold and Treasury Metals

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

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

Diversification Opportunities for Moneta Gold and Treasury Metals

-0.28

Correlation Coefficient

Moneta Gold  Treasury Metals

Very good diversification

The 3 months correlation between Moneta and Treasury is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Moneta Gold and Treasury Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Metals and Moneta Gold 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 Moneta Gold are associated (or correlated) with Treasury Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Metals has no effect on the direction of Moneta Gold i.e., Moneta Gold and Treasury Metals go up and down completely randomly.

Pair Corralation between Moneta Gold and Treasury Metals

Assuming the 90 days horizon Moneta Gold is expected to generate 1.72 times less return on investment than Treasury Metals. But when comparing it to its historical volatility, Moneta Gold is 1.89 times less risky than Treasury Metals. It trades about 0.19 of its potential returns per unit of risk. Treasury Metals is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Treasury Metals on March 4, 2024 and sell it today you would earn a total of  8.00  from holding Treasury Metals or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.31%
Values	Daily Returns

Moneta Gold  vs.  Treasury Metals

Moneta Gold

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Moneta Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Moneta Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Treasury Metals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Metals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Treasury Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moneta Gold and Treasury Metals

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

The idea behind Moneta Gold and Treasury Metals 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.