Correlation Between SPDR Gold and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and SPDR Dow 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 SPDR Gold and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Gold Trust and SPDR Dow Jones, you can compare the effects of market volatilities on SPDR Gold and SPDR Dow 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 SPDR Gold with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and SPDR Dow.
Diversification Opportunities for SPDR Gold and SPDR Dow
Poor diversification
The 3 months correlation between SPDR and SPDR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Trust and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and SPDR 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 SPDR Gold Trust are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of SPDR Gold i.e., SPDR Gold and SPDR Dow go up and down completely randomly.
Pair Corralation between SPDR Gold and SPDR Dow
Assuming the 90 days trading horizon SPDR Gold Trust is expected to under-perform the SPDR Dow. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Gold Trust is 1.09 times less risky than SPDR Dow. The etf trades about -0.14 of its potential returns per unit of risk. The SPDR Dow Jones is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 854,175 in SPDR Dow Jones on August 31, 2024 and sell it today you would earn a total of 75,825 from holding SPDR Dow Jones or generate 8.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SPDR Gold Trust vs. SPDR Dow Jones
Performance |
| Timeline |
| SPDR Gold Trust |
| SPDR Dow Jones |
SPDR Gold and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and SPDR Dow
The main advantage of trading using opposite SPDR Gold and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow's long position.| SPDR Gold vs. SPDR Dow Jones | SPDR Gold vs. SPDR SP 500 | SPDR Gold vs. SPDR Series Trust | SPDR Gold vs. SPDR SP Regional |
| SPDR Dow vs. Promotora y Operadora | SPDR Dow vs. UnitedHealth Group Incorporated | SPDR Dow vs. Qulitas Controladora SAB | SPDR Dow vs. Hoteles City Express |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |