Correlation Between SPDR Gold and VanEck Smart

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

Diversification Opportunities for SPDR Gold and VanEck Smart

0.61

Correlation Coefficient

SPDR Gold  VanEck Smart

Poor diversification

The 3 months correlation between SPDR and VanEck is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and VanEck Smart Contract in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Smart Contract 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 VanEck Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Smart Contract has no effect on the direction of SPDR Gold i.e., SPDR Gold and VanEck Smart go up and down completely randomly.

Pair Corralation between SPDR Gold and VanEck Smart

Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 0.16 times more return on investment than VanEck Smart. However, SPDR Gold Shares is 6.31 times less risky than VanEck Smart. It trades about 0.0 of its potential returns per unit of risk. VanEck Smart Contract is currently generating about -0.06 per unit of risk. If you would invest  23,092  in SPDR Gold Shares on September 27, 2024 and sell it today you would lose (8.00) from holding SPDR Gold Shares or give up 0.03% of portfolio value over 90 days.

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

SPDR Gold Shares  vs.  VanEck Smart Contract

SPDR Gold Shares

Risk-Adjusted Performance

7 of 100

OK

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 comparatively stable basic indicators, SPDR Gold is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck Smart Contract

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Smart Contract are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, VanEck Smart exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Gold and VanEck Smart

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

The idea behind SPDR Gold Shares and VanEck Smart Contract 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..