Correlation Between SPDR Gold and IShares Gold
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and IShares Gold 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 IShares Gold 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 iShares Gold Trust, you can compare the effects of market volatilities on SPDR Gold and IShares Gold 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 IShares Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and IShares Gold.
Diversification Opportunities for SPDR Gold and IShares Gold
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and iShares Gold Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Gold 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 Shares are associated (or correlated) with IShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Gold Trust has no effect on the direction of SPDR Gold i.e., SPDR Gold and IShares Gold go up and down completely randomly.
Pair Corralation between SPDR Gold and IShares Gold
Considering the 90-day investment horizon SPDR Gold Shares is expected to generate 1.09 times more return on investment than IShares Gold. However, SPDR Gold is 1.09 times more volatile than iShares Gold Trust. It trades about 0.35 of its potential returns per unit of risk. iShares Gold Trust is currently generating about 0.27 per unit of risk. If you would invest 24,542 in SPDR Gold Shares on November 2, 2024 and sell it today you would earn a total of 1,263 from holding SPDR Gold Shares or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Gold Shares vs. iShares Gold Trust
Performance |
| Timeline |
| SPDR Gold Shares |
| iShares Gold Trust |
SPDR Gold and IShares Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and IShares Gold
The main advantage of trading using opposite SPDR Gold and IShares Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, IShares Gold 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 IShares Gold will offset losses from the drop in IShares Gold's 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 |
| IShares Gold vs. iShares Silver Trust | IShares Gold vs. VanEck Gold Miners | IShares Gold vs. SPDR Gold Shares | IShares Gold vs. Invesco DB Commodity |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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