Can any of the company-specific risk be diversified away by investing in both GraniteShares Gold 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 GraniteShares Gold and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GraniteShares Gold Trust and SPDR Gold MiniShares, you can compare the effects of market volatilities on GraniteShares Gold 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 GraniteShares Gold with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares Gold and SPDR Gold.
Diversification Opportunities for GraniteShares Gold and SPDR Gold
The 3 months correlation between GraniteShares and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares Gold Trust and SPDR Gold MiniShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Gold MiniShares and GraniteShares 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 GraniteShares Gold Trust 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 MiniShares has no effect on the direction of GraniteShares Gold i.e., GraniteShares Gold and SPDR Gold go up and down completely randomly.
Pair Corralation between GraniteShares Gold and SPDR Gold
Considering the 90-day investment horizon GraniteShares Gold is expected to generate 1.04 times less return on investment than SPDR Gold. In addition to that, GraniteShares Gold is 1.02 times more volatile than SPDR Gold MiniShares. It trades about 0.05 of its total potential returns per unit of risk. SPDR Gold MiniShares is currently generating about 0.05 per unit of volatility. If you would invest 4,609 in SPDR Gold MiniShares on March 6, 2024 and sell it today you would earn a total of 44.00 from holding SPDR Gold MiniShares or generate 0.95% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Gold Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, GraniteShares Gold may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold MiniShares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, SPDR Gold may actually be approaching a critical reversion point that can send shares even higher in July 2024.