Correlation Between IShares Gold and IPath Series
Can any of the company-specific risk be diversified away by investing in both IShares Gold and IPath Series 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 IPath Series 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 iPath Series B, you can compare the effects of market volatilities on IShares Gold and IPath Series 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 IPath Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and IPath Series.
Diversification Opportunities for IShares Gold and IPath Series
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IPath is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and iPath Series B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPath Series B 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 IPath Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPath Series B has no effect on the direction of IShares Gold i.e., IShares Gold and IPath Series go up and down completely randomly.
Pair Corralation between IShares Gold and IPath Series
Given the investment horizon of 90 days iShares Gold Trust is expected to under-perform the IPath Series. But the etf apears to be less risky and, when comparing its historical volatility, iShares Gold Trust is 1.3 times less risky than IPath Series. The etf trades about -0.11 of its potential returns per unit of risk. The iPath Series B is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,546 in iPath Series B on September 1, 2024 and sell it today you would earn a total of 185.00 from holding iPath Series B or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Gold Trust vs. iPath Series B
Performance |
| Timeline |
| iShares Gold Trust |
| iPath Series B |
IShares Gold and IPath Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Gold and IPath Series
The main advantage of trading using opposite IShares Gold and IPath Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Gold position performs unexpectedly, IPath Series 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 IPath Series will offset losses from the drop in IPath Series' long position.| IShares Gold vs. SPDR Gold MiniShares | IShares Gold vs. Goldman Sachs Physical | IShares Gold vs. GraniteShares Gold Trust | IShares Gold vs. VanEck Merk Gold |
| IPath Series vs. KraneShares Global Carbon | IPath Series vs. KraneShares European Carbon | IPath Series vs. KraneShares California Carbon | IPath Series vs. Breakwave Dry Bulk |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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