Correlation Between IShares Gold and BetaPro Gold

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

By analyzing existing cross correlation between iShares Gold Bullion and BetaPro Gold Bullion, you can compare the effects of market volatilities on IShares Gold and BetaPro 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 IShares Gold with a short position of BetaPro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and BetaPro Gold.

Diversification Opportunities for IShares Gold and BetaPro Gold

0.54

Correlation Coefficient

IShares Gold  BetaPro Gold

Very weak diversification

The 3 months correlation between IShares and BetaPro is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Bullion and BetaPro Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Gold Bullion 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 Bullion are associated (or correlated) with BetaPro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Gold Bullion has no effect on the direction of IShares Gold i.e., IShares Gold and BetaPro Gold go up and down completely randomly.

Pair Corralation between IShares Gold and BetaPro Gold

Assuming the 90 days trading horizon IShares Gold is expected to generate 1.73 times less return on investment than BetaPro Gold. But when comparing it to its historical volatility, iShares Gold Bullion is 2.28 times less risky than BetaPro Gold. It trades about 0.01 of its potential returns per unit of risk. BetaPro Gold Bullion is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,575  in BetaPro Gold Bullion on April 24, 2025 and sell it today you would lose (6.00) from holding BetaPro Gold Bullion or give up 0.23% of portfolio value over 90 days.

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

iShares Gold Bullion  vs.  BetaPro Gold Bullion

iShares Gold Bullion

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Bullion are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Gold is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

BetaPro Gold Bullion

Risk-Adjusted Performance

Very Weak

Over the last 90 days BetaPro Gold Bullion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, BetaPro Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Gold and BetaPro Gold

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

The idea behind iShares Gold Bullion and BetaPro Gold Bullion 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.