Correlation Between SPDR DoubleLine and IShares Gold

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Can any of the company-specific risk be diversified away by investing in both SPDR DoubleLine and IShares 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 SPDR DoubleLine and IShares Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR DoubleLine Short and IShares Gold Trust, you can compare the effects of market volatilities on SPDR DoubleLine and IShares 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 SPDR DoubleLine with a short position of IShares Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR DoubleLine and IShares Gold.

Diversification Opportunities for SPDR DoubleLine and IShares Gold

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between SPDR and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPDR DoubleLine Short and IShares Gold Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares Gold Trust and SPDR DoubleLine 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 DoubleLine Short are associated (or correlated) with IShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares Gold Trust has no effect on the direction of SPDR DoubleLine i.e., SPDR DoubleLine and IShares Gold go up and down completely randomly.

Pair Corralation between SPDR DoubleLine and IShares Gold

Given the investment horizon of 90 days SPDR DoubleLine is expected to generate 17.27 times less return on investment than IShares Gold. But when comparing it to its historical volatility, SPDR DoubleLine Short is 10.95 times less risky than IShares Gold. It trades about 0.35 of its potential returns per unit of risk. IShares Gold Trust is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  3,848  in IShares Gold Trust on December 30, 2023 and sell it today you would earn a total of  353.00  from holding IShares Gold Trust or generate 9.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SPDR DoubleLine Short  vs.  IShares Gold Trust

 Performance 
       Timeline  
SPDR DoubleLine Short 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR DoubleLine Short are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR DoubleLine is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
IShares Gold Trust 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Gold Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, IShares Gold may actually be approaching a critical reversion point that can send shares even higher in April 2024.

SPDR DoubleLine and IShares Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR DoubleLine and IShares Gold

The main advantage of trading using opposite SPDR DoubleLine and IShares Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR DoubleLine position performs unexpectedly, IShares 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 IShares Gold will offset losses from the drop in IShares Gold's long position.
The idea behind SPDR DoubleLine Short and IShares Gold Trust 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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