Correlation Between SPDR Gold and Keyence

Can any of the company-specific risk be diversified away by investing in both SPDR Gold and Keyence 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 Keyence 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 Keyence, you can compare the effects of market volatilities on SPDR Gold and Keyence 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 Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Keyence.

Diversification Opportunities for SPDR Gold and Keyence

-0.64

Correlation Coefficient

SPDR Gold  Keyence

Excellent diversification

The 3 months correlation between SPDR and Keyence is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence 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 Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of SPDR Gold i.e., SPDR Gold and Keyence go up and down completely randomly.

Pair Corralation between SPDR Gold and Keyence

Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 0.66 times more return on investment than Keyence. However, SPDR Gold Shares is 1.51 times less risky than Keyence. It trades about 0.0 of its potential returns per unit of risk. Keyence is currently generating about -0.06 per unit of risk. If you would invest  23,150  in SPDR Gold Shares on September 27, 2024 and sell it today you would lose (7.00) from holding SPDR Gold Shares or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SPDR Gold Shares  vs.  Keyence

SPDR Gold Shares

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SPDR Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Keyence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keyence has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SPDR Gold and Keyence

The main advantage of trading using opposite SPDR Gold and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.

The idea behind SPDR Gold Shares and Keyence pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.