Correlation Between IShares Gold and Exchange Traded

Can any of the company-specific risk be diversified away by investing in both IShares Gold and Exchange Traded 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 Exchange Traded into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Gold Strategy and Exchange Traded Concepts, you can compare the effects of market volatilities on IShares Gold and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and Exchange Traded.

Diversification Opportunities for IShares Gold and Exchange Traded

0.7

Correlation Coefficient

IShares Gold  Exchange Traded

Poor diversification

The 3 months correlation between IShares and Exchange is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Strategy and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Strategy are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of IShares Gold i.e., IShares Gold and Exchange Traded go up and down completely randomly.

Pair Corralation between IShares Gold and Exchange Traded

If you would invest  5,320  in iShares Gold Strategy on February 22, 2024 and sell it today you would earn a total of  1,052  from holding iShares Gold Strategy or generate 19.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

iShares Gold Strategy  vs.  Exchange Traded Concepts

iShares Gold Strategy

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Strategy are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, IShares Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Exchange Traded 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 Exchange Traded

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

The idea behind iShares Gold Strategy and Exchange Traded Concepts 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.