Correlation Between SPDR Gold and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and Leverage Shares 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 Leverage Shares 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 Leverage Shares 1x, you can compare the effects of market volatilities on SPDR Gold and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Leverage Shares.
Diversification Opportunities for SPDR Gold and Leverage Shares
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPDR and Leverage is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Leverage Shares 1x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 1x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 1x has no effect on the direction of SPDR Gold i.e., SPDR Gold and Leverage Shares go up and down completely randomly.
Pair Corralation between SPDR Gold and Leverage Shares
Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 0.29 times more return on investment than Leverage Shares. However, SPDR Gold Shares is 3.46 times less risky than Leverage Shares. It trades about 0.15 of its potential returns per unit of risk. Leverage Shares 1x is currently generating about -0.06 per unit of risk. If you would invest 19,677 in SPDR Gold Shares on September 1, 2024 and sell it today you would earn a total of 3,516 from holding SPDR Gold Shares or generate 17.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
SPDR Gold Shares vs. Leverage Shares 1x
Performance |
| Timeline |
| SPDR Gold Shares |
| Leverage Shares 1x |
SPDR Gold and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and Leverage Shares
The main advantage of trading using opposite SPDR Gold and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' 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 |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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