Correlation Between IShares Gold and GraniteShares Platinum
Can any of the company-specific risk be diversified away by investing in both IShares Gold and GraniteShares Platinum 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 GraniteShares Platinum 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 GraniteShares Platinum Trust, you can compare the effects of market volatilities on IShares Gold and GraniteShares Platinum 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 GraniteShares Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and GraniteShares Platinum.
Diversification Opportunities for IShares Gold and GraniteShares Platinum
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and GraniteShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and GraniteShares Platinum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares Platinum 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 GraniteShares Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares Platinum has no effect on the direction of IShares Gold i.e., IShares Gold and GraniteShares Platinum go up and down completely randomly.
Pair Corralation between IShares Gold and GraniteShares Platinum
Given the investment horizon of 90 days iShares Gold Trust is expected to generate 0.91 times more return on investment than GraniteShares Platinum. However, iShares Gold Trust is 1.1 times less risky than GraniteShares Platinum. It trades about -0.09 of its potential returns per unit of risk. GraniteShares Platinum Trust is currently generating about -0.12 per unit of risk. If you would invest 2,728 in iShares Gold Trust on September 2, 2024 and sell it today you would lose (73.00) from holding iShares Gold Trust or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Gold Trust vs. GraniteShares Platinum Trust
Performance |
| Timeline |
| iShares Gold Trust |
| GraniteShares Platinum |
IShares Gold and GraniteShares Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Gold and GraniteShares Platinum
The main advantage of trading using opposite IShares Gold and GraniteShares Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Gold position performs unexpectedly, GraniteShares Platinum 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 GraniteShares Platinum will offset losses from the drop in GraniteShares Platinum's long position.The idea behind iShares Gold Trust and GraniteShares Platinum Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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