Correlation Between SPDR Gold and USCF Gold

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

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

Diversification Opportunities for SPDR Gold and USCF Gold

0.0

Correlation Coefficient

SPDR Gold  USCF Gold

Pay attention - limited upside

The 3 months correlation between SPDR and USCF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares 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 SPDR 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 SPDR Gold Shares 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 SPDR Gold i.e., SPDR Gold and USCF Gold go up and down completely randomly.

Pair Corralation between SPDR Gold and USCF Gold

If you would invest  24,140  in SPDR Gold Shares on December 27, 2024 and sell it today you would earn a total of  3,684  from holding SPDR Gold Shares or generate 15.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SPDR Gold Shares  vs.  USCF Gold Strategy

SPDR Gold Shares

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal essential indicators, SPDR Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

USCF Gold Strategy

Risk-Adjusted Performance

Solid

Over the last 90 days USCF Gold Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, USCF Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPDR Gold and USCF Gold

The main advantage of trading using opposite SPDR Gold and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold 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 SPDR Gold Shares 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.