Correlation Between Mid Cap and USCF Gold

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

By analyzing existing cross correlation between Mid Cap Value and USCF Gold Strategy, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of USCF Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and USCF Gold.

Diversification Opportunities for Mid Cap and USCF Gold

0.59

Correlation Coefficient

Mid Cap  USCF Gold

Very weak diversification

The 3 months correlation between Mid and USCF is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value 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 Mid Cap 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 Mid Cap Value 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 Mid Cap i.e., Mid Cap and USCF Gold go up and down completely randomly.

Pair Corralation between Mid Cap and USCF Gold

Assuming the 90 days horizon Mid Cap Value is expected to under-perform the USCF Gold. In addition to that, Mid Cap is 2.02 times more volatile than USCF Gold Strategy. It trades about -0.2 of its total potential returns per unit of risk. USCF Gold Strategy is currently generating about 0.58 per unit of volatility. If you would invest  2,634  in USCF Gold Strategy on January 28, 2024 and sell it today you would earn a total of  110.00  from holding USCF Gold Strategy or generate 4.18% return on investment over 90 days.

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

Mid Cap Value  vs.  USCF Gold Strategy

Mid Cap Value

Risk-Adjusted Performance

2 of 100

Weak

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

USCF Gold Strategy

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Gold Strategy are ranked lower than 26 (%) 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 May 2024.

Pair Trading with Mid Cap and USCF Gold

The main advantage of trading using opposite Mid Cap and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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 Mid Cap Value 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.