Correlation Between Abrdn Physical and USCF Gold

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

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

Diversification Opportunities for Abrdn Physical and USCF Gold

0.69

Correlation Coefficient

Abrdn Physical  USCF Gold

Poor diversification

The 3 months correlation between Abrdn and USCF is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Physical Gold 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 Abrdn Physical 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 abrdn Physical Gold 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 Abrdn Physical i.e., Abrdn Physical and USCF Gold go up and down completely randomly.

Pair Corralation between Abrdn Physical and USCF Gold

Given the investment horizon of 90 days Abrdn Physical is expected to generate 2.38 times less return on investment than USCF Gold. But when comparing it to its historical volatility, abrdn Physical Gold is 1.03 times less risky than USCF Gold. It trades about 0.02 of its potential returns per unit of risk. USCF Gold Strategy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,397  in USCF Gold Strategy on May 2, 2025 and sell it today you would earn a total of  107.00  from holding USCF Gold Strategy or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

abrdn Physical Gold  vs.  USCF Gold Strategy

abrdn Physical Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Abrdn Physical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

USCF Gold Strategy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Gold Strategy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, USCF Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Abrdn Physical and USCF Gold

The main advantage of trading using opposite Abrdn Physical and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Physical 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 abrdn Physical Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.