Correlation Between Barclays Capital and SPDR Gold

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

Diversification Opportunities for Barclays Capital and SPDR Gold

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Barclays and SPDR is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and SPDR Gold Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Gold Shares and Barclays Capital 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 Barclays Capital 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 Shares has no effect on the direction of Barclays Capital i.e., Barclays Capital and SPDR Gold go up and down completely randomly.

Pair Corralation between Barclays Capital and SPDR Gold

If you would invest  24,109  in SPDR Gold Shares on September 18, 2024 and sell it today you would earn a total of  285.00  from holding SPDR Gold Shares or generate 1.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Barclays Capital  vs.  SPDR Gold Shares

 Performance 
       Timeline  
Barclays Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
SPDR Gold Shares 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, SPDR Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Barclays Capital and SPDR Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barclays Capital and SPDR Gold

The main advantage of trading using opposite Barclays Capital and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Capital position performs unexpectedly, SPDR 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 SPDR Gold will offset losses from the drop in SPDR Gold's long position.
The idea behind Barclays Capital and SPDR Gold Shares 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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