Correlation Between MicroSectors Gold and USCF Gold

Can any of the company-specific risk be diversified away by investing in both MicroSectors 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 MicroSectors 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 MicroSectors Gold 3X and USCF Gold Strategy, you can compare the effects of market volatilities on MicroSectors 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 MicroSectors Gold with a short position of USCF Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Gold and USCF Gold.

Diversification Opportunities for MicroSectors Gold and USCF Gold

-0.96

Correlation Coefficient

MicroSectors Gold  USCF Gold

Pay attention - limited upside

The 3 months correlation between MicroSectors and USCF is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Gold 3X 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 MicroSectors 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 MicroSectors Gold 3X 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 MicroSectors Gold i.e., MicroSectors Gold and USCF Gold go up and down completely randomly.

Pair Corralation between MicroSectors Gold and USCF Gold

Given the investment horizon of 90 days MicroSectors Gold 3X is expected to under-perform the USCF Gold. In addition to that, MicroSectors Gold is 4.05 times more volatile than USCF Gold Strategy. It trades about -0.11 of its total potential returns per unit of risk. USCF Gold Strategy is currently generating about 0.15 per unit of volatility. If you would invest  2,576  in USCF Gold Strategy on March 7, 2024 and sell it today you would earn a total of  171.00  from holding USCF Gold Strategy or generate 6.64% return on investment over 90 days.

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

MicroSectors Gold 3X  vs.  USCF Gold Strategy

MicroSectors Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroSectors Gold 3X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

USCF Gold Strategy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Gold Strategy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, USCF Gold may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with MicroSectors Gold and USCF Gold

The main advantage of trading using opposite MicroSectors Gold and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors 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 MicroSectors Gold 3X 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.