Correlation Between DB Gold and MicroSectors Gold

Can any of the company-specific risk be diversified away by investing in both DB Gold and MicroSectors Gold 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 DB Gold and MicroSectors Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DB Gold Double and MicroSectors Gold 3X, you can compare the effects of market volatilities on DB Gold and MicroSectors Gold 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 DB Gold with a short position of MicroSectors Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Gold and MicroSectors Gold.

Diversification Opportunities for DB Gold and MicroSectors Gold

-0.24

Correlation Coefficient

DB Gold  MicroSectors Gold

Very good diversification

The 3 months correlation between DZZ and MicroSectors is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding DB Gold Double and MicroSectors Gold 3X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Gold and DB 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 DB Gold Double are associated (or correlated) with MicroSectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Gold has no effect on the direction of DB Gold i.e., DB Gold and MicroSectors Gold go up and down completely randomly.

Pair Corralation between DB Gold and MicroSectors Gold

Considering the 90-day investment horizon DB Gold Double is expected to generate 1.59 times more return on investment than MicroSectors Gold. However, DB Gold is 1.59 times more volatile than MicroSectors Gold 3X. It trades about 0.01 of its potential returns per unit of risk. MicroSectors Gold 3X is currently generating about -0.33 per unit of risk. If you would invest  163.00  in DB Gold Double on December 29, 2024 and sell it today you would lose (2.00) from holding DB Gold Double or give up 1.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DB Gold Double  vs.  MicroSectors Gold 3X

DB Gold Double

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DB Gold Double are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, DB Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MicroSectors Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days MicroSectors Gold 3X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with DB Gold and MicroSectors Gold

The main advantage of trading using opposite DB Gold and MicroSectors Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Gold position performs unexpectedly, MicroSectors Gold 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 MicroSectors Gold will offset losses from the drop in MicroSectors Gold's long position.

The idea behind DB Gold Double and MicroSectors Gold 3X 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.

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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.