Correlation Between Xtrackers and SPDR Gold
Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 Xtrackers and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers II and SPDR Gold Shares, you can compare the effects of market volatilities on Xtrackers 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 Xtrackers with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and SPDR Gold.
Diversification Opportunities for Xtrackers and SPDR Gold
Pay attention - limited upside
The 3 months correlation between Xtrackers and SPDR is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II 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 Xtrackers 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 Xtrackers II 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 Xtrackers i.e., Xtrackers and SPDR Gold go up and down completely randomly.
Pair Corralation between Xtrackers and SPDR Gold
Assuming the 90 days trading horizon Xtrackers II is expected to under-perform the SPDR Gold. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers II is 1.8 times less risky than SPDR Gold. The etf trades about -0.12 of its potential returns per unit of risk. The SPDR Gold Shares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 21,942 in SPDR Gold Shares on August 27, 2024 and sell it today you would earn a total of 1,141 from holding SPDR Gold Shares or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Xtrackers II vs. SPDR Gold Shares
Performance |
| Timeline |
| Xtrackers II |
| SPDR Gold Shares |
Xtrackers and SPDR Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and SPDR Gold
The main advantage of trading using opposite Xtrackers and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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.| Xtrackers vs. Xtrackers II Global | Xtrackers vs. Xtrackers FTSE | Xtrackers vs. Xtrackers SP 500 | Xtrackers vs. Xtrackers MSCI |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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