Correlation Between Gold Bullion and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Gold Bullion and SSgA SPDR 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 Gold Bullion and SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Bullion Securities and SSgA SPDR ETFs, you can compare the effects of market volatilities on Gold Bullion and SSgA SPDR 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 Gold Bullion with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bullion and SSgA SPDR.
Diversification Opportunities for Gold Bullion and SSgA SPDR
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and SSgA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bullion Securities and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Gold Bullion 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 Gold Bullion Securities are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Gold Bullion i.e., Gold Bullion and SSgA SPDR go up and down completely randomly.
Pair Corralation between Gold Bullion and SSgA SPDR
Assuming the 90 days trading horizon Gold Bullion is expected to generate 1.36 times less return on investment than SSgA SPDR. In addition to that, Gold Bullion is 1.66 times more volatile than SSgA SPDR ETFs. It trades about 0.25 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.55 per unit of volatility. If you would invest 9,144 in SSgA SPDR ETFs on October 21, 2024 and sell it today you would earn a total of 586.00 from holding SSgA SPDR ETFs or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Bullion Securities vs. SSgA SPDR ETFs
Performance |
| Timeline |
| Gold Bullion Securities |
| SSgA SPDR ETFs |
Gold Bullion and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bullion and SSgA SPDR
The main advantage of trading using opposite Gold Bullion and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bullion position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| Gold Bullion vs. Amundi Index Solutions | Gold Bullion vs. Multi Units Luxembourg | Gold Bullion vs. iShares Digital Entertainment | Gold Bullion vs. Amundi Index Solutions |
| SSgA SPDR vs. Lyxor UCITS Japan | SSgA SPDR vs. Lyxor UCITS Japan | SSgA SPDR vs. Lyxor UCITS Stoxx | SSgA SPDR vs. Amundi CAC 40 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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