Correlation Between Global X and USCF Gold

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

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

Diversification Opportunities for Global X and USCF Gold

0.91

Correlation Coefficient

Global X  USCF Gold

Almost no diversification

The 3 months correlation between Global and USCF is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global X Silver 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 Global X 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 Global X Silver 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 Global X i.e., Global X and USCF Gold go up and down completely randomly.

Pair Corralation between Global X and USCF Gold

Considering the 90-day investment horizon Global X Silver is expected to generate 2.9 times more return on investment than USCF Gold. However, Global X is 2.9 times more volatile than USCF Gold Strategy. It trades about 0.19 of its potential returns per unit of risk. USCF Gold Strategy is currently generating about 0.33 per unit of risk. If you would invest  3,240  in Global X Silver on December 27, 2024 and sell it today you would earn a total of  804.00  from holding Global X Silver or generate 24.81% return on investment over 90 days.

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

Global X Silver  vs.  USCF Gold Strategy

Global X Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Silver are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish forward indicators, Global X disclosed 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 26 (%) 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 Global X and USCF Gold

The main advantage of trading using opposite Global X and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Silver 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.