Correlation Between IShares Gold and USCF Gold

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

Diversification Opportunities for IShares Gold and USCF Gold

1.0

Correlation Coefficient

IShares Gold  USCF Gold

No risk reduction

The 3 months correlation between IShares and USCF is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust 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 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 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 IShares Gold i.e., IShares Gold and USCF Gold go up and down completely randomly.

Pair Corralation between IShares Gold and USCF Gold

Considering the 90-day investment horizon IShares Gold is expected to generate 1.07 times less return on investment than USCF Gold. In addition to that, IShares Gold is 1.06 times more volatile than USCF Gold Strategy. It trades about 0.09 of its total potential returns per unit of risk. USCF Gold Strategy is currently generating about 0.1 per unit of volatility. If you would invest  2,801  in USCF Gold Strategy on August 30, 2024 and sell it today you would earn a total of  160.00  from holding USCF Gold Strategy or generate 5.71% return on investment over 90 days.

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

iShares Gold Trust  vs.  USCF Gold Strategy

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 comparatively stable basic indicators, IShares Gold is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

USCF Gold Strategy

Risk-Adjusted Performance

7 of 100

Modest

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 IShares Gold and USCF Gold

The main advantage of trading using opposite IShares Gold and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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 iShares Gold Trust 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.