Correlation Between SPDR SP and USCF ETF
Can any of the company-specific risk be diversified away by investing in both SPDR SP and USCF ETF 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 SPDR SP and USCF ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Oil and USCF ETF Trust, you can compare the effects of market volatilities on SPDR SP and USCF ETF 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 SPDR SP with a short position of USCF ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and USCF ETF.
Diversification Opportunities for SPDR SP and USCF ETF
Poor diversification
The 3 months correlation between SPDR and USCF is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and USCF ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF ETF Trust and SPDR SP 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 SPDR SP Oil are associated (or correlated) with USCF ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF ETF Trust has no effect on the direction of SPDR SP i.e., SPDR SP and USCF ETF go up and down completely randomly.
Pair Corralation between SPDR SP and USCF ETF
Considering the 90-day investment horizon SPDR SP is expected to generate 14.82 times less return on investment than USCF ETF. In addition to that, SPDR SP is 1.94 times more volatile than USCF ETF Trust. It trades about 0.01 of its total potential returns per unit of risk. USCF ETF Trust is currently generating about 0.17 per unit of volatility. If you would invest 2,659 in USCF ETF Trust on September 1, 2024 and sell it today you would earn a total of 479.00 from holding USCF ETF Trust or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
SPDR SP Oil vs. USCF ETF Trust
Performance |
| Timeline |
| SPDR SP Oil |
| USCF ETF Trust |
SPDR SP and USCF ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and USCF ETF
The main advantage of trading using opposite SPDR SP and USCF ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, USCF ETF 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 USCF ETF will offset losses from the drop in USCF ETF's long position.| SPDR SP vs. VanEck Oil Services | SPDR SP vs. SPDR SP Metals | SPDR SP vs. Energy Select Sector | SPDR SP vs. SPDR SP Retail |
| USCF ETF vs. Franklin Templeton ETF | USCF ETF vs. Altrius Global Dividend | USCF ETF vs. Invesco Exchange Traded | USCF ETF vs. Franklin International Core |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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