Correlation Between DGAZ and United States

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Can any of the company-specific risk be diversified away by investing in both DGAZ and United States 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 DGAZ and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DGAZ and United States Oil, you can compare the effects of market volatilities on DGAZ and United States 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 DGAZ with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of DGAZ and United States.

Diversification Opportunities for DGAZ and United States

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between DGAZ and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DGAZ and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil and DGAZ 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 DGAZ are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Oil has no effect on the direction of DGAZ i.e., DGAZ and United States go up and down completely randomly.

Pair Corralation between DGAZ and United States

If you would invest  7,362  in United States Oil on December 30, 2023 and sell it today you would earn a total of  511.00  from holding United States Oil or generate 6.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

DGAZ  vs.  United States Oil

 Performance 
       Timeline  
DGAZ 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days DGAZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DGAZ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
United States Oil 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United States Oil are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, United States displayed solid returns over the last few months and may actually be approaching a breakup point.

DGAZ and United States Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DGAZ and United States

The main advantage of trading using opposite DGAZ and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DGAZ position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.
The idea behind DGAZ and United States Oil 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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