Correlation Between USCF ETF and Dow Jones
Can any of the company-specific risk be diversified away by investing in both USCF ETF and Dow Jones 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 ETF and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USCF ETF Trust and Dow Jones Industrial, you can compare the effects of market volatilities on USCF ETF and Dow Jones 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 ETF with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of USCF ETF and Dow Jones.
Diversification Opportunities for USCF ETF and Dow Jones
Almost no diversification
The 3 months correlation between USCF and Dow is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding USCF ETF Trust and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and USCF ETF 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 ETF Trust are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of USCF ETF i.e., USCF ETF and Dow Jones go up and down completely randomly.
Pair Corralation between USCF ETF and Dow Jones
Considering the 90-day investment horizon USCF ETF is expected to generate 1.36 times less return on investment than Dow Jones. In addition to that, USCF ETF is 1.1 times more volatile than Dow Jones Industrial. It trades about 0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
USCF ETF Trust vs. Dow Jones Industrial
Performance |
| Timeline |
USCF ETF and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
USCF ETF Trust
Pair trading matchups for USCF ETF
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with USCF ETF and Dow Jones
The main advantage of trading using opposite USCF ETF and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USCF ETF position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| USCF ETF vs. Freedom Day Dividend | USCF ETF vs. Franklin Templeton ETF | USCF ETF vs. iShares MSCI China | USCF ETF vs. Tidal Trust II |
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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 Stocks Directory module to find actively traded stocks across global markets.
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