Correlation Between AECOM TECHNOLOGY and SPDR Gold
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and SPDR 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 AECOM TECHNOLOGY and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and SPDR Gold Shares, you can compare the effects of market volatilities on AECOM TECHNOLOGY and SPDR 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 AECOM TECHNOLOGY with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and SPDR Gold.
Diversification Opportunities for AECOM TECHNOLOGY and SPDR Gold
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and SPDR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and SPDR Gold Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Gold Shares and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with SPDR Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Gold Shares has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and SPDR Gold go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and SPDR Gold
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 1.56 times less return on investment than SPDR Gold. In addition to that, AECOM TECHNOLOGY is 1.6 times more volatile than SPDR Gold Shares. It trades about 0.08 of its total potential returns per unit of risk. SPDR Gold Shares is currently generating about 0.19 per unit of volatility. If you would invest 22,707 in SPDR Gold Shares on September 12, 2024 and sell it today you would earn a total of 1,205 from holding SPDR Gold Shares or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. SPDR Gold Shares
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| SPDR Gold Shares |
AECOM TECHNOLOGY and SPDR Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and SPDR Gold
The main advantage of trading using opposite AECOM TECHNOLOGY and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY position performs unexpectedly, SPDR 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 SPDR Gold will offset losses from the drop in SPDR Gold's long position.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc |
Check out your portfolio center.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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