Correlation Between USCF SummerHaven and IShares Commodity
Can any of the company-specific risk be diversified away by investing in both USCF SummerHaven and IShares Commodity 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 SummerHaven and IShares Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USCF SummerHaven Dynamic and iShares Commodity Curve, you can compare the effects of market volatilities on USCF SummerHaven and IShares Commodity 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 SummerHaven with a short position of IShares Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of USCF SummerHaven and IShares Commodity.
Diversification Opportunities for USCF SummerHaven and IShares Commodity
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USCF and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding USCF SummerHaven Dynamic and iShares Commodity Curve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Commodity Curve and USCF SummerHaven 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 SummerHaven Dynamic are associated (or correlated) with IShares Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Commodity Curve has no effect on the direction of USCF SummerHaven i.e., USCF SummerHaven and IShares Commodity go up and down completely randomly.
Pair Corralation between USCF SummerHaven and IShares Commodity
Given the investment horizon of 90 days USCF SummerHaven Dynamic is expected to generate 0.9 times more return on investment than IShares Commodity. However, USCF SummerHaven Dynamic is 1.12 times less risky than IShares Commodity. It trades about 0.06 of its potential returns per unit of risk. iShares Commodity Curve is currently generating about -0.09 per unit of risk. If you would invest 1,988 in USCF SummerHaven Dynamic on September 3, 2024 and sell it today you would earn a total of 37.00 from holding USCF SummerHaven Dynamic or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USCF SummerHaven Dynamic vs. iShares Commodity Curve
Performance |
| Timeline |
| USCF SummerHaven Dynamic |
| iShares Commodity Curve |
USCF SummerHaven and IShares Commodity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USCF SummerHaven and IShares Commodity
The main advantage of trading using opposite USCF SummerHaven and IShares Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USCF SummerHaven position performs unexpectedly, IShares Commodity 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 IShares Commodity will offset losses from the drop in IShares Commodity's long position.| USCF SummerHaven vs. abrdn Bloomberg All | USCF SummerHaven vs. GraniteShares Bloomberg Commodity | USCF SummerHaven vs. iShares Bloomberg Roll | USCF SummerHaven vs. iShares Commodity Curve |
| IShares Commodity vs. iShares Bloomberg Roll | IShares Commodity vs. USCF SummerHaven Dynamic | IShares Commodity vs. abrdn Bloomberg All | IShares Commodity vs. GraniteShares Bloomberg Commodity |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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