Correlation Between DB Gold and USCF Gold

Can any of the company-specific risk be diversified away by investing in both DB 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 DB 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 DB Gold Double and USCF Gold Strategy, you can compare the effects of market volatilities on DB 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 DB Gold with a short position of USCF Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Gold and USCF Gold.

Diversification Opportunities for DB Gold and USCF Gold

0.99

Correlation Coefficient

DB Gold  USCF Gold

No risk reduction

The 3 months correlation between DGP and USCF is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding DB Gold Double 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 DB 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 DB Gold Double 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 DB Gold i.e., DB Gold and USCF Gold go up and down completely randomly.

Pair Corralation between DB Gold and USCF Gold

Considering the 90-day investment horizon DB Gold Double is expected to generate 2.12 times more return on investment than USCF Gold. However, DB Gold is 2.12 times more volatile than USCF Gold Strategy. It trades about 0.08 of its potential returns per unit of risk. USCF Gold Strategy is currently generating about 0.1 per unit of risk. If you would invest  6,102  in DB Gold Double on August 30, 2024 and sell it today you would earn a total of  572.00  from holding DB Gold Double or generate 9.37% return on investment over 90 days.

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

DB Gold Double  vs.  USCF Gold Strategy

DB Gold Double

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DB Gold Double are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, DB Gold may actually be approaching a critical reversion point that can send shares even higher in December 2024.

USCF Gold Strategy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Gold Strategy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, USCF Gold is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DB Gold and USCF Gold

The main advantage of trading using opposite DB Gold and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB 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 DB Gold Double 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.