Correlation Between SPDR Gold and Vanguard World
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and Vanguard World 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 Vanguard World 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 Vanguard World, you can compare the effects of market volatilities on SPDR Gold and Vanguard World 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 Vanguard World. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Vanguard World.
Diversification Opportunities for SPDR Gold and Vanguard World
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Vanguard is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Trust and Vanguard World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard World 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 Vanguard World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard World has no effect on the direction of SPDR Gold i.e., SPDR Gold and Vanguard World go up and down completely randomly.
Pair Corralation between SPDR Gold and Vanguard World
Assuming the 90 days trading horizon SPDR Gold Trust is expected to generate 1.33 times more return on investment than Vanguard World. However, SPDR Gold is 1.33 times more volatile than Vanguard World. It trades about 0.11 of its potential returns per unit of risk. Vanguard World is currently generating about 0.09 per unit of risk. If you would invest 316,126 in SPDR Gold Trust on August 31, 2024 and sell it today you would earn a total of 183,474 from holding SPDR Gold Trust or generate 58.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
SPDR Gold Trust vs. Vanguard World
Performance |
| Timeline |
| SPDR Gold Trust |
| Vanguard World |
SPDR Gold and Vanguard World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and Vanguard World
The main advantage of trading using opposite SPDR Gold and Vanguard World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, Vanguard World 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 Vanguard World will offset losses from the drop in Vanguard World'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 |
| Vanguard World vs. Promotora y Operadora | Vanguard World vs. UnitedHealth Group Incorporated | Vanguard World vs. Qulitas Controladora SAB | Vanguard World 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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