Correlation Between SPDR Gold and USCF Gold
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and USCF 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 SPDR Gold and USCF Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Gold Shares and USCF Gold Strategy, you can compare the effects of market volatilities on SPDR Gold and USCF 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 SPDR Gold with a short position of USCF Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and USCF Gold.
Diversification Opportunities for SPDR Gold and USCF Gold
No risk reduction
The 3 months correlation between SPDR and USCF is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and USCF Gold Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Gold Strategy and SPDR 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 SPDR Gold Shares are associated (or correlated) with USCF Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Gold Strategy has no effect on the direction of SPDR Gold i.e., SPDR Gold and USCF Gold go up and down completely randomly.
Pair Corralation between SPDR Gold and USCF Gold
Considering the 90-day investment horizon SPDR Gold Shares is expected to under-perform the USCF Gold. In addition to that, SPDR Gold is 1.08 times more volatile than USCF Gold Strategy. It trades about -0.12 of its total potential returns per unit of risk. USCF Gold Strategy is currently generating about -0.12 per unit of volatility. If you would invest 3,071 in USCF Gold Strategy on August 29, 2024 and sell it today you would lose (110.00) from holding USCF Gold Strategy or give up 3.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Gold Shares vs. USCF Gold Strategy
Performance |
| Timeline |
| SPDR Gold Shares |
| USCF Gold Strategy |
SPDR Gold and USCF Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and USCF Gold
The main advantage of trading using opposite SPDR Gold and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, USCF 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 USCF Gold will offset losses from the drop in USCF Gold's long position.| SPDR Gold vs. iShares Silver Trust | SPDR Gold vs. VanEck Gold Miners | SPDR Gold vs. SPDR SP 500 | SPDR Gold vs. United States Oil |
| USCF Gold vs. MicroSectors Gold 3X | USCF Gold vs. Franklin Responsibly Sourced | USCF Gold vs. GraniteShares Gold Trust | USCF Gold vs. DB Gold Double |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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