Correlation Between SPDR Gold and United States
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Gold Shares and United States Copper, you can compare the effects of market volatilities on SPDR Gold and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and United States.
Diversification Opportunities for SPDR Gold and United States
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and United is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and United States Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Copper 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 Shares are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Copper has no effect on the direction of SPDR Gold i.e., SPDR Gold and United States go up and down completely randomly.
Pair Corralation between SPDR Gold and United States
Considering the 90-day investment horizon SPDR Gold Shares is expected to generate 0.76 times more return on investment than United States. However, SPDR Gold Shares is 1.31 times less risky than United States. It trades about -0.13 of its potential returns per unit of risk. United States Copper is currently generating about -0.16 per unit of risk. If you would invest 25,333 in SPDR Gold Shares on August 29, 2024 and sell it today you would lose (1,038) from holding SPDR Gold Shares or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Gold Shares vs. United States Copper
Performance |
| Timeline |
| SPDR Gold Shares |
| United States Copper |
SPDR Gold and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and United States
The main advantage of trading using opposite SPDR Gold and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| SPDR Gold vs. iShares Silver Trust | SPDR Gold vs. VanEck Gold Miners | SPDR Gold vs. SPDR SP 500 | SPDR Gold vs. United States Oil |
| United States vs. Aquagold International | United States vs. Morningstar Unconstrained Allocation | United States vs. High Yield Municipal Fund | United States vs. Thrivent High Yield |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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