Correlation Between USCF ETF and Freedom Day

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

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

Diversification Opportunities for USCF ETF and Freedom Day

0.82

Correlation Coefficient

USCF ETF  Freedom Day

Very poor diversification

The 3 months correlation between USCF and Freedom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding USCF ETF Trust and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and USCF ETF 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 USCF ETF Trust are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of USCF ETF i.e., USCF ETF and Freedom Day go up and down completely randomly.

Pair Corralation between USCF ETF and Freedom Day

Considering the 90-day investment horizon USCF ETF Trust is expected to generate 1.05 times more return on investment than Freedom Day. However, USCF ETF is 1.05 times more volatile than Freedom Day Dividend. It trades about 0.09 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.03 per unit of risk. If you would invest  2,942  in USCF ETF Trust on September 14, 2024 and sell it today you would earn a total of  118.00  from holding USCF ETF Trust or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

USCF ETF Trust  vs.  Freedom Day Dividend

USCF ETF Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in USCF ETF Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, USCF ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Freedom Day Dividend

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with USCF ETF and Freedom Day

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

The idea behind USCF ETF Trust and Freedom Day Dividend 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.