Correlation Between IShares Gold and IShares

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

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

Diversification Opportunities for IShares Gold and IShares

0.07

Correlation Coefficient

IShares Gold  IShares

Significant diversification

The 3 months correlation between IShares and IShares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and IShares 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 iShares Gold Trust are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of IShares Gold i.e., IShares Gold and IShares go up and down completely randomly.

Pair Corralation between IShares Gold and IShares

If you would invest  2,509  in iShares Gold Trust on September 5, 2024 and sell it today you would earn a total of  127.00  from holding iShares Gold Trust or generate 5.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

iShares Gold Trust  vs.  IShares

iShares Gold Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Gold is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Gold and IShares

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

The idea behind iShares Gold Trust and IShares 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.