Correlation Between SPDR Gold and IShares Bitcoin

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

Diversification Opportunities for SPDR Gold and IShares Bitcoin

-0.06

Correlation Coefficient

SPDR Gold  IShares Bitcoin

Good diversification

The 3 months correlation between SPDR and IShares is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and iShares Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Bitcoin Trust 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 IShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Bitcoin Trust has no effect on the direction of SPDR Gold i.e., SPDR Gold and IShares Bitcoin go up and down completely randomly.

Pair Corralation between SPDR Gold and IShares Bitcoin

Considering the 90-day investment horizon SPDR Gold is expected to generate 3.43 times less return on investment than IShares Bitcoin. But when comparing it to its historical volatility, SPDR Gold Shares is 2.67 times less risky than IShares Bitcoin. It trades about 0.14 of its potential returns per unit of risk. iShares Bitcoin Trust is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,213  in iShares Bitcoin Trust on September 16, 2024 and sell it today you would earn a total of  578.00  from holding iShares Bitcoin Trust or generate 11.09% return on investment over 90 days.

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

SPDR Gold Shares  vs.  iShares Bitcoin Trust

SPDR Gold Shares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 3 (%) 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.

iShares Bitcoin Trust

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Bitcoin Trust are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, IShares Bitcoin unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Gold and IShares Bitcoin

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

The idea behind SPDR Gold Shares and iShares Bitcoin 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.