Correlation Between SPDR Gold and Xtrackers Nikkei
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and Xtrackers Nikkei 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 Xtrackers Nikkei 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 Xtrackers Nikkei 225, you can compare the effects of market volatilities on SPDR Gold and Xtrackers Nikkei 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 Xtrackers Nikkei. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Xtrackers Nikkei.
Diversification Opportunities for SPDR Gold and Xtrackers Nikkei
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPDR and Xtrackers is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Xtrackers Nikkei 225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Nikkei 225 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 Xtrackers Nikkei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Nikkei 225 has no effect on the direction of SPDR Gold i.e., SPDR Gold and Xtrackers Nikkei go up and down completely randomly.
Pair Corralation between SPDR Gold and Xtrackers Nikkei
Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 0.78 times more return on investment than Xtrackers Nikkei. However, SPDR Gold Shares is 1.29 times less risky than Xtrackers Nikkei. It trades about 0.1 of its potential returns per unit of risk. Xtrackers Nikkei 225 is currently generating about 0.05 per unit of risk. If you would invest 15,701 in SPDR Gold Shares on August 28, 2024 and sell it today you would earn a total of 7,382 from holding SPDR Gold Shares or generate 47.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.81% |
| Values | Daily Returns |
SPDR Gold Shares vs. Xtrackers Nikkei 225
Performance |
| Timeline |
| SPDR Gold Shares |
| Xtrackers Nikkei 225 |
SPDR Gold and Xtrackers Nikkei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and Xtrackers Nikkei
The main advantage of trading using opposite SPDR Gold and Xtrackers Nikkei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, Xtrackers Nikkei 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 Xtrackers Nikkei will offset losses from the drop in Xtrackers Nikkei'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 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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