Correlation Between United States and IShares Gold
Can any of the company-specific risk be diversified away by investing in both United States and IShares 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 United States and IShares Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Brent and iShares Gold Trust, you can compare the effects of market volatilities on United States and IShares 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 United States with a short position of IShares Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and IShares Gold.
Diversification Opportunities for United States and IShares Gold
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and IShares is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding United States Brent and iShares Gold Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Gold Trust and United States 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 United States Brent are associated (or correlated) with IShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Gold Trust has no effect on the direction of United States i.e., United States and IShares Gold go up and down completely randomly.
Pair Corralation between United States and IShares Gold
Considering the 90-day investment horizon United States Brent is expected to generate 1.31 times more return on investment than IShares Gold. However, United States is 1.31 times more volatile than iShares Gold Trust. It trades about 0.15 of its potential returns per unit of risk. iShares Gold Trust is currently generating about -0.04 per unit of risk. If you would invest 2,846 in United States Brent on August 27, 2024 and sell it today you would earn a total of 136.00 from holding United States Brent or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Brent vs. iShares Gold Trust
Performance |
| Timeline |
| United States Brent |
| iShares Gold Trust |
United States and IShares Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and IShares Gold
The main advantage of trading using opposite United States and IShares Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, IShares 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 IShares Gold will offset losses from the drop in IShares Gold's long position.| United States vs. Aquagold International | United States vs. Morningstar Unconstrained Allocation | United States vs. High Yield Municipal Fund | United States vs. Thrivent High Yield |
| IShares Gold vs. SPDR Gold MiniShares | IShares Gold vs. Goldman Sachs Physical | IShares Gold vs. GraniteShares Gold Trust | IShares Gold vs. VanEck Merk Gold |
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 Stocks Directory module to find actively traded stocks across global markets.
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