Correlation Between SPDR Gold and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and SPDR SP 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 SP 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 SP Regional, you can compare the effects of market volatilities on SPDR Gold and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and SPDR SP.
Diversification Opportunities for SPDR Gold and SPDR SP
Average diversification
The 3 months correlation between SPDR and SPDR is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Trust and SPDR SP Regional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Regional 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Regional has no effect on the direction of SPDR Gold i.e., SPDR Gold and SPDR SP go up and down completely randomly.
Pair Corralation between SPDR Gold and SPDR SP
Assuming the 90 days trading horizon SPDR Gold Trust is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Gold Trust is 4.73 times less risky than SPDR SP. The etf trades about -0.07 of its potential returns per unit of risk. The SPDR SP Regional is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 105,900 in SPDR SP Regional on September 2, 2024 and sell it today you would earn a total of 25,260 from holding SPDR SP Regional or generate 23.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SPDR Gold Trust vs. SPDR SP Regional
Performance |
| Timeline |
| SPDR Gold Trust |
| SPDR SP Regional |
SPDR Gold and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and SPDR SP
The main advantage of trading using opposite SPDR Gold and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP'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 SP vs. SPDR Dow Jones | SPDR SP vs. SPDR Gold Trust | SPDR SP vs. SPDR SP 500 | SPDR SP vs. SPDR Series Trust |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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