Correlation Between IShares Gold and FT Cboe
Can any of the company-specific risk be diversified away by investing in both IShares Gold and FT Cboe 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 FT Cboe 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 FT Cboe Vest, you can compare the effects of market volatilities on IShares Gold and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and FT Cboe.
Diversification Opportunities for IShares Gold and FT Cboe
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IGLD is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of IShares Gold i.e., IShares Gold and FT Cboe go up and down completely randomly.
Pair Corralation between IShares Gold and FT Cboe
Given the investment horizon of 90 days iShares Gold Trust is expected to generate 1.28 times more return on investment than FT Cboe. However, IShares Gold is 1.28 times more volatile than FT Cboe Vest. It trades about 0.11 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.1 per unit of risk. If you would invest 1,811 in iShares Gold Trust on November 27, 2024 and sell it today you would earn a total of 1,117 from holding iShares Gold Trust or generate 61.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Gold Trust vs. FT Cboe Vest
Performance |
| Timeline |
| iShares Gold Trust |
| FT Cboe Vest |
IShares Gold and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Gold and FT Cboe
The main advantage of trading using opposite IShares Gold and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Gold position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's 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 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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