Correlation Between USCF Gold and IShares Energy

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

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

Diversification Opportunities for USCF Gold and IShares Energy

0.13

Correlation Coefficient

USCF Gold  IShares Energy

Average diversification

The 3 months correlation between USCF and IShares is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding USCF Gold Strategy and iShares Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy Storage and USCF 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 USCF Gold Strategy are associated (or correlated) with IShares Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy Storage has no effect on the direction of USCF Gold i.e., USCF Gold and IShares Energy go up and down completely randomly.

Pair Corralation between USCF Gold and IShares Energy

Given the investment horizon of 90 days USCF Gold Strategy is expected to generate 0.56 times more return on investment than IShares Energy. However, USCF Gold Strategy is 1.78 times less risky than IShares Energy. It trades about 0.36 of its potential returns per unit of risk. iShares Energy Storage is currently generating about 0.0 per unit of risk. If you would invest  2,885  in USCF Gold Strategy on December 28, 2024 and sell it today you would earn a total of  456.00  from holding USCF Gold Strategy or generate 15.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

USCF Gold Strategy  vs.  iShares Energy Storage

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.

iShares Energy Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Energy Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with USCF Gold and IShares Energy

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

The idea behind USCF Gold Strategy and iShares Energy Storage 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.