Correlation Between IShares Core and SPDR Gold
Can any of the company-specific risk be diversified away by investing in both IShares Core and SPDR Gold 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 IShares Core and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and SPDR Gold Shares, you can compare the effects of market volatilities on IShares Core and SPDR Gold 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 IShares Core with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and SPDR Gold.
Diversification Opportunities for IShares Core and SPDR Gold
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SPDR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and SPDR Gold Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Gold Shares and IShares Core 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 iShares Core SP are associated (or correlated) with SPDR Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Gold Shares has no effect on the direction of IShares Core i.e., IShares Core and SPDR Gold go up and down completely randomly.
Pair Corralation between IShares Core and SPDR Gold
Assuming the 90 days trading horizon iShares Core SP is expected to generate 1.02 times more return on investment than SPDR Gold. However, IShares Core is 1.02 times more volatile than SPDR Gold Shares. It trades about 0.18 of its potential returns per unit of risk. SPDR Gold Shares is currently generating about -0.09 per unit of risk. If you would invest 57,160 in iShares Core SP on August 30, 2024 and sell it today you would earn a total of 2,920 from holding iShares Core SP or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Core SP vs. SPDR Gold Shares
Performance |
| Timeline |
| iShares Core SP |
| SPDR Gold Shares |
IShares Core and SPDR Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and SPDR Gold
The main advantage of trading using opposite IShares Core and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, SPDR Gold 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 SPDR Gold will offset losses from the drop in SPDR Gold's long position.| 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 |
| SPDR Gold vs. UBS Fund Solutions | SPDR Gold vs. Xtrackers Nikkei 225 | SPDR Gold vs. iShares VII PLC | SPDR Gold 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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