Correlation Between SPDR Gold and IShares Core
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and IShares Core 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 Core 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 Core MSCI, you can compare the effects of market volatilities on SPDR Gold and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and IShares Core.
Diversification Opportunities for SPDR Gold and IShares Core
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of SPDR Gold i.e., SPDR Gold and IShares Core go up and down completely randomly.
Pair Corralation between SPDR Gold and IShares Core
Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 1.22 times more return on investment than IShares Core. However, SPDR Gold is 1.22 times more volatile than iShares Core MSCI. It trades about 0.13 of its potential returns per unit of risk. iShares Core MSCI is currently generating about -0.03 per unit of risk. If you would invest 23,298 in SPDR Gold Shares on August 26, 2024 and sell it today you would earn a total of 609.00 from holding SPDR Gold Shares or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SPDR Gold Shares vs. iShares Core MSCI
Performance |
| Timeline |
| SPDR Gold Shares |
| iShares Core MSCI |
SPDR Gold and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and IShares Core
The main advantage of trading using opposite SPDR Gold and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| SPDR Gold vs. SPDR Barclays 10 | SPDR Gold vs. SPDR ICE BofA | SPDR Gold vs. SPDR SP Utilities | SPDR Gold vs. SPDR ICE BofA |
| IShares Core vs. iShares Govt Bond | IShares Core vs. iShares Global AAA AA | IShares Core vs. iShares Smart City | IShares Core vs. iShares Broad High |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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