Correlation Between MicroSectors Gold and Abrdn Physical

Can any of the company-specific risk be diversified away by investing in both MicroSectors Gold and Abrdn Physical 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 Abrdn Physical 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 abrdn Physical Precious, you can compare the effects of market volatilities on MicroSectors Gold and Abrdn Physical 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 Abrdn Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Gold and Abrdn Physical.

Diversification Opportunities for MicroSectors Gold and Abrdn Physical

-0.99

Correlation Coefficient

MicroSectors Gold  Abrdn Physical

Pay attention - limited upside

The 3 months correlation between MicroSectors and Abrdn is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Gold 3X and abrdn Physical Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Physical Precious 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 Abrdn Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Physical Precious has no effect on the direction of MicroSectors Gold i.e., MicroSectors Gold and Abrdn Physical go up and down completely randomly.

Pair Corralation between MicroSectors Gold and Abrdn Physical

Given the investment horizon of 90 days MicroSectors Gold 3X is expected to under-perform the Abrdn Physical. In addition to that, MicroSectors Gold is 2.48 times more volatile than abrdn Physical Precious. It trades about -0.19 of its total potential returns per unit of risk. abrdn Physical Precious is currently generating about 0.18 per unit of volatility. If you would invest  9,634  in abrdn Physical Precious on January 29, 2024 and sell it today you would earn a total of  470.00  from holding abrdn Physical Precious or generate 4.88% 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.  abrdn Physical Precious

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 weak performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

abrdn Physical Precious

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Precious are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Abrdn Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroSectors Gold and Abrdn Physical

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

The idea behind MicroSectors Gold 3X and abrdn Physical Precious 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.