Correlation Between IShares Gold and Teucrium Sugar

Can any of the company-specific risk be diversified away by investing in both IShares Gold and Teucrium Sugar 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 Teucrium Sugar 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 Teucrium Sugar, you can compare the effects of market volatilities on IShares Gold and Teucrium Sugar 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 Teucrium Sugar. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and Teucrium Sugar.

Diversification Opportunities for IShares Gold and Teucrium Sugar

0.67

Correlation Coefficient

IShares Gold  Teucrium Sugar

Poor diversification

The 3 months correlation between IShares and Teucrium is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and Teucrium Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Sugar 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 Teucrium Sugar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Sugar has no effect on the direction of IShares Gold i.e., IShares Gold and Teucrium Sugar go up and down completely randomly.

Pair Corralation between IShares Gold and Teucrium Sugar

Given the investment horizon of 90 days iShares Gold Trust is expected to generate 0.71 times more return on investment than Teucrium Sugar. However, iShares Gold Trust is 1.42 times less risky than Teucrium Sugar. It trades about 0.11 of its potential returns per unit of risk. Teucrium Sugar is currently generating about 0.07 per unit of risk. If you would invest  2,485  in iShares Gold Trust on September 3, 2024 and sell it today you would earn a total of  170.00  from holding iShares Gold Trust or generate 6.84% return on investment over 90 days.

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

iShares Gold Trust  vs.  Teucrium Sugar

iShares Gold Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, IShares Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Teucrium Sugar

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teucrium Sugar are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Teucrium Sugar is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Gold and Teucrium Sugar

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

The idea behind iShares Gold Trust and Teucrium Sugar 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.