Correlation Between SPDR Gold and Vanguard Funds
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and Vanguard Funds 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 Funds 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 Funds Public, you can compare the effects of market volatilities on SPDR Gold and Vanguard Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Vanguard Funds.
Diversification Opportunities for SPDR Gold and Vanguard Funds
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of SPDR Gold i.e., SPDR Gold and Vanguard Funds go up and down completely randomly.
Pair Corralation between SPDR Gold and Vanguard Funds
Assuming the 90 days trading horizon SPDR Gold Shares is expected to under-perform the Vanguard Funds. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Gold Shares is 1.05 times less risky than Vanguard Funds. The etf trades about -0.04 of its potential returns per unit of risk. The Vanguard Funds Public is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 10,168 in Vanguard Funds Public on August 31, 2024 and sell it today you would earn a total of 648.00 from holding Vanguard Funds Public or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR Gold Shares vs. Vanguard Funds Public
Performance |
| Timeline |
| SPDR Gold Shares |
| Vanguard Funds Public |
SPDR Gold and Vanguard Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and Vanguard Funds
The main advantage of trading using opposite SPDR Gold and Vanguard Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, Vanguard Funds 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 Funds will offset losses from the drop in Vanguard Funds' long position.| SPDR Gold vs. UBS Fund Solutions | SPDR Gold vs. Xtrackers II | SPDR Gold vs. Xtrackers Nikkei 225 | SPDR Gold vs. iShares VII PLC |
| Vanguard Funds vs. Vanguard ESG Developed | Vanguard Funds vs. Vanguard Funds Public | Vanguard Funds vs. Vanguard Funds PLC | Vanguard Funds vs. Vanguard Funds Public |
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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