Correlation Between US Commodity and DGAZ
Can any of the company-specific risk be diversified away by investing in both US Commodity and DGAZ 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 US Commodity and DGAZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Commodity Funds and DGAZ, you can compare the effects of market volatilities on US Commodity and DGAZ 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 US Commodity with a short position of DGAZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Commodity and DGAZ.
Diversification Opportunities for US Commodity and DGAZ
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between USOD and DGAZ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US Commodity Funds and DGAZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGAZ and US Commodity 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 US Commodity Funds are associated (or correlated) with DGAZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGAZ has no effect on the direction of US Commodity i.e., US Commodity and DGAZ go up and down completely randomly.
Pair Corralation between US Commodity and DGAZ
If you would invest (100.00) in DGAZ on February 12, 2024 and sell it today you would earn a total of 100.00 from holding DGAZ or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Commodity Funds vs. DGAZ
Performance |
| Timeline |
| US Commodity Funds |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DGAZ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
US Commodity and DGAZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Commodity and DGAZ
The main advantage of trading using opposite US Commodity and DGAZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Commodity position performs unexpectedly, DGAZ 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 DGAZ will offset losses from the drop in DGAZ's long position.| US Commodity vs. ProShares UltraShort Silver | US Commodity vs. MicroSectors Gold Miners | US Commodity vs. UBS ETRACS | US Commodity vs. DB Gold Double |
| DGAZ vs. ProShares UltraShort Silver | DGAZ vs. MicroSectors Gold Miners | DGAZ vs. UBS ETRACS | DGAZ vs. DB Gold Double |
Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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