Correlation Between Information Services and Precious Metals

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

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

Diversification Opportunities for Information Services and Precious Metals

0.87

Correlation Coefficient

Information Services  Precious Metals

Very poor diversification

The 3 months correlation between Information and Precious is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And and Information Services 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 Information Services are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of Information Services i.e., Information Services and Precious Metals go up and down completely randomly.

Pair Corralation between Information Services and Precious Metals

Assuming the 90 days trading horizon Information Services is expected to generate 0.83 times more return on investment than Precious Metals. However, Information Services is 1.2 times less risky than Precious Metals. It trades about 0.27 of its potential returns per unit of risk. Precious Metals And is currently generating about 0.06 per unit of risk. If you would invest  2,594  in Information Services on April 22, 2025 and sell it today you would earn a total of  656.00  from holding Information Services or generate 25.29% return on investment over 90 days.

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

Information Services  vs.  Precious Metals And

Information Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Information Services displayed solid returns over the last few months and may actually be approaching a breakup point.

Precious Metals And

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Precious Metals And are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Precious Metals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Information Services and Precious Metals

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

The idea behind Information Services and Precious Metals And 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.