Correlation Between USCF Gold and IndexIQ ETF
Can any of the company-specific risk be diversified away by investing in both USCF Gold and IndexIQ ETF 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 USCF Gold and IndexIQ ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USCF Gold Strategy and IndexIQ ETF Trust, you can compare the effects of market volatilities on USCF Gold and IndexIQ ETF 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 USCF Gold with a short position of IndexIQ ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of USCF Gold and IndexIQ ETF.
Diversification Opportunities for USCF Gold and IndexIQ ETF
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between USCF and IndexIQ is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding USCF Gold Strategy and IndexIQ ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ ETF Trust and USCF 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 USCF Gold Strategy are associated (or correlated) with IndexIQ ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ ETF Trust has no effect on the direction of USCF Gold i.e., USCF Gold and IndexIQ ETF go up and down completely randomly.
Pair Corralation between USCF Gold and IndexIQ ETF
Given the investment horizon of 90 days USCF Gold Strategy is expected to generate 0.67 times more return on investment than IndexIQ ETF. However, USCF Gold Strategy is 1.49 times less risky than IndexIQ ETF. It trades about 0.23 of its potential returns per unit of risk. IndexIQ ETF Trust is currently generating about -0.42 per unit of risk. If you would invest 3,189 in USCF Gold Strategy on January 9, 2025 and sell it today you would earn a total of 170.00 from holding USCF Gold Strategy or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USCF Gold Strategy vs. IndexIQ ETF Trust
Performance |
| Timeline |
| USCF Gold Strategy |
| IndexIQ ETF Trust |
USCF Gold and IndexIQ ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USCF Gold and IndexIQ ETF
The main advantage of trading using opposite USCF Gold and IndexIQ ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USCF Gold position performs unexpectedly, IndexIQ ETF 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 IndexIQ ETF will offset losses from the drop in IndexIQ ETF's long position.| USCF Gold vs. iShares MSCI Global | USCF Gold vs. Global X Silver | USCF Gold vs. VanEck Junior Gold | USCF Gold vs. Sprott Gold Miners |
| IndexIQ ETF vs. iShares Global Clean | IndexIQ ETF vs. iShares Exponential Technologies | IndexIQ ETF vs. Invesco Solar ETF | IndexIQ ETF vs. First Trust NASDAQ |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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