Correlation Between SPDR Gold and SPDR Series
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and SPDR Series 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 Series 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 Series Trust, you can compare the effects of market volatilities on SPDR Gold and SPDR Series 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 Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and SPDR Series.
Diversification Opportunities for SPDR Gold and SPDR Series
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and SPDR is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Trust and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of SPDR Gold i.e., SPDR Gold and SPDR Series go up and down completely randomly.
Pair Corralation between SPDR Gold and SPDR Series
Assuming the 90 days trading horizon SPDR Gold Trust is expected to generate 0.68 times more return on investment than SPDR Series. However, SPDR Gold Trust is 1.47 times less risky than SPDR Series. It trades about 0.08 of its potential returns per unit of risk. SPDR Series Trust is currently generating about 0.04 per unit of risk. If you would invest 329,726 in SPDR Gold Trust on September 2, 2024 and sell it today you would earn a total of 169,874 from holding SPDR Gold Trust or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Gold Trust vs. SPDR Series Trust
Performance |
| Timeline |
| SPDR Gold Trust |
| SPDR Series Trust |
SPDR Gold and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and SPDR Series
The main advantage of trading using opposite SPDR Gold and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, SPDR Series 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 Series will offset losses from the drop in SPDR Series' 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 Series vs. Promotora y Operadora | SPDR Series vs. UnitedHealth Group Incorporated | SPDR Series vs. Qulitas Controladora SAB | SPDR Series 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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