Correlation Between VanEck Junior and USCF Gold

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

By analyzing existing cross correlation between VanEck Junior Gold and USCF Gold Strategy, you can compare the effects of market volatilities on VanEck Junior and USCF 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 VanEck Junior with a short position of USCF Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Junior and USCF Gold.

Diversification Opportunities for VanEck Junior and USCF Gold

0.6

Correlation Coefficient

VanEck Junior  USCF Gold

Poor diversification

The 3 months correlation between VanEck and USCF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Junior Gold and USCF Gold Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Gold Strategy and VanEck Junior 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 VanEck Junior Gold are associated (or correlated) with USCF Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Gold Strategy has no effect on the direction of VanEck Junior i.e., VanEck Junior and USCF Gold go up and down completely randomly.

Pair Corralation between VanEck Junior and USCF Gold

Given the investment horizon of 90 days VanEck Junior Gold is expected to generate 3.06 times more return on investment than USCF Gold. However, VanEck Junior is 3.06 times more volatile than USCF Gold Strategy. It trades about 0.25 of its potential returns per unit of risk. USCF Gold Strategy is currently generating about 0.36 per unit of risk. If you would invest  4,232  in VanEck Junior Gold on December 28, 2024 and sell it today you would earn a total of  1,514  from holding VanEck Junior Gold or generate 35.78% return on investment over 90 days.

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

VanEck Junior Gold  vs.  USCF Gold Strategy

VanEck Junior Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Junior Gold are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VanEck Junior revealed solid returns over the last few months and may actually be approaching a breakup point.

USCF Gold Strategy

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Gold Strategy are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, USCF Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Junior and USCF Gold

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

The idea behind VanEck Junior Gold and USCF Gold Strategy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.