Correlation Between SPDR Gold and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and Vanguard FTSE 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 FTSE 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 Vanguard FTSE Emerging, you can compare the effects of market volatilities on SPDR Gold and Vanguard FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Vanguard FTSE.
Diversification Opportunities for SPDR Gold and Vanguard FTSE
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and Vanguard is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Vanguard FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Emerging 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 Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Emerging has no effect on the direction of SPDR Gold i.e., SPDR Gold and Vanguard FTSE go up and down completely randomly.
Pair Corralation between SPDR Gold and Vanguard FTSE
Considering the 90-day investment horizon SPDR Gold Shares is expected to generate 0.95 times more return on investment than Vanguard FTSE. However, SPDR Gold Shares is 1.06 times less risky than Vanguard FTSE. It trades about 0.3 of its potential returns per unit of risk. Vanguard FTSE Emerging is currently generating about -0.05 per unit of risk. If you would invest 23,960 in SPDR Gold Shares on October 20, 2024 and sell it today you would earn a total of 967.00 from holding SPDR Gold Shares or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Gold Shares vs. Vanguard FTSE Emerging
Performance |
| Timeline |
| SPDR Gold Shares |
| Vanguard FTSE Emerging |
SPDR Gold and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and Vanguard FTSE
The main advantage of trading using opposite SPDR Gold and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE'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 |
| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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