Correlation Between United States and SPDR Gold
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Oil and SPDR Gold Shares, you can compare the effects of market volatilities on United States 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 United States with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and SPDR Gold.
Diversification Opportunities for United States and SPDR Gold
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and SPDR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding United States Oil 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 United States 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 United States Oil 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 United States i.e., United States and SPDR Gold go up and down completely randomly.
Pair Corralation between United States and SPDR Gold
Considering the 90-day investment horizon United States Oil is expected to generate 1.68 times more return on investment than SPDR Gold. However, United States is 1.68 times more volatile than SPDR Gold Shares. It trades about -0.01 of its potential returns per unit of risk. SPDR Gold Shares is currently generating about -0.1 per unit of risk. If you would invest 7,398 in United States Oil on August 23, 2024 and sell it today you would lose (78.00) from holding United States Oil or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Oil vs. SPDR Gold Shares
Performance |
| Timeline |
| United States Oil |
| SPDR Gold Shares |
United States and SPDR Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and SPDR Gold
The main advantage of trading using opposite United States and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Invesco DB Oil | United States vs. United States Gasoline | United States vs. United States Brent | United States vs. United States 12 |
| SPDR Gold vs. iShares Silver Trust | SPDR Gold vs. VanEck Gold Miners | SPDR Gold vs. SPDR SP 500 | SPDR Gold vs. United States Oil |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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