Correlation Between IShares Gold and VanEck Merk
Can any of the company-specific risk be diversified away by investing in both IShares Gold and VanEck Merk 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 IShares Gold and VanEck Merk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Gold Trust and VanEck Merk Gold, you can compare the effects of market volatilities on IShares Gold and VanEck Merk 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 IShares Gold with a short position of VanEck Merk. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and VanEck Merk.
Diversification Opportunities for IShares Gold and VanEck Merk
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and VanEck is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and VanEck Merk Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Merk Gold and IShares 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 iShares Gold Trust are associated (or correlated) with VanEck Merk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Merk Gold has no effect on the direction of IShares Gold i.e., IShares Gold and VanEck Merk go up and down completely randomly.
Pair Corralation between IShares Gold and VanEck Merk
Considering the 90-day investment horizon iShares Gold Trust is expected to under-perform the VanEck Merk. But the etf apears to be less risky and, when comparing its historical volatility, iShares Gold Trust is 1.0 times less risky than VanEck Merk. The etf trades about -0.19 of its potential returns per unit of risk. The VanEck Merk Gold is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 2,690 in VanEck Merk Gold on August 31, 2024 and sell it today you would lose (145.00) from holding VanEck Merk Gold or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Gold Trust vs. VanEck Merk Gold
Performance |
| Timeline |
| iShares Gold Trust |
| VanEck Merk Gold |
IShares Gold and VanEck Merk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Gold and VanEck Merk
The main advantage of trading using opposite IShares Gold and VanEck Merk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Gold position performs unexpectedly, VanEck Merk 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 VanEck Merk will offset losses from the drop in VanEck Merk's long position.| IShares Gold vs. iShares Silver Trust | IShares Gold vs. VanEck Gold Miners | IShares Gold vs. SPDR Gold Shares | IShares Gold vs. Invesco DB Commodity |
| VanEck Merk vs. GraniteShares Gold Trust | VanEck Merk vs. Goldman Sachs Physical | VanEck Merk vs. abrdn Physical Gold | VanEck Merk vs. Sprott Gold Miners |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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