Correlation Between Abrdn Physical and SPDR SP

Can any of the company-specific risk be diversified away by investing in both Abrdn Physical and SPDR SP 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 Abrdn Physical and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between abrdn Physical Gold and SPDR SP Global, you can compare the effects of market volatilities on Abrdn Physical and SPDR SP 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 Abrdn Physical with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Physical and SPDR SP.

Diversification Opportunities for Abrdn Physical and SPDR SP

0.28

Correlation Coefficient

Abrdn Physical  SPDR SP

Modest diversification

The 3 months correlation between Abrdn and SPDR is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Physical Gold and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global and Abrdn Physical 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 abrdn Physical Gold are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of Abrdn Physical i.e., Abrdn Physical and SPDR SP go up and down completely randomly.

Pair Corralation between Abrdn Physical and SPDR SP

Given the investment horizon of 90 days abrdn Physical Gold is expected to generate 1.11 times more return on investment than SPDR SP. However, Abrdn Physical is 1.11 times more volatile than SPDR SP Global. It trades about 0.06 of its potential returns per unit of risk. SPDR SP Global is currently generating about -0.06 per unit of risk. If you would invest  2,466  in abrdn Physical Gold on September 14, 2024 and sell it today you would earn a total of  92.00  from holding abrdn Physical Gold or generate 3.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

abrdn Physical Gold  vs.  SPDR SP Global

abrdn Physical Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Abrdn Physical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

SPDR SP Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SPDR SP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Abrdn Physical and SPDR SP

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

The idea behind abrdn Physical Gold and SPDR SP Global 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..