Correlation Between SPDR Gold and Teucrium Soybean
Can any of the company-specific risk be diversified away by investing in both SPDR Gold and Teucrium Soybean 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 Teucrium Soybean 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 Teucrium Soybean, you can compare the effects of market volatilities on SPDR Gold and Teucrium Soybean 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 Teucrium Soybean. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Teucrium Soybean.
Diversification Opportunities for SPDR Gold and Teucrium Soybean
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Teucrium is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Teucrium Soybean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Soybean 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 Teucrium Soybean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Soybean has no effect on the direction of SPDR Gold i.e., SPDR Gold and Teucrium Soybean go up and down completely randomly.
Pair Corralation between SPDR Gold and Teucrium Soybean
Considering the 90-day investment horizon SPDR Gold Shares is expected to generate 0.82 times more return on investment than Teucrium Soybean. However, SPDR Gold Shares is 1.22 times less risky than Teucrium Soybean. It trades about 0.09 of its potential returns per unit of risk. Teucrium Soybean is currently generating about -0.04 per unit of risk. If you would invest 18,384 in SPDR Gold Shares on December 8, 2024 and sell it today you would earn a total of 8,455 from holding SPDR Gold Shares or generate 45.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR Gold Shares vs. Teucrium Soybean
Performance |
Timeline |
SPDR Gold Shares |
Teucrium Soybean |
SPDR Gold and Teucrium Soybean Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Gold and Teucrium Soybean
The main advantage of trading using opposite SPDR Gold and Teucrium Soybean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold position performs unexpectedly, Teucrium Soybean 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 Teucrium Soybean will offset losses from the drop in Teucrium Soybean's long position.SPDR Gold vs. iShares Silver Trust | SPDR Gold vs. VanEck Gold Miners | SPDR Gold vs. SPDR SP 500 | SPDR Gold vs. United States Oil |
Teucrium Soybean vs. Teucrium Corn | Teucrium Soybean vs. Teucrium Wheat | Teucrium Soybean vs. Teucrium Sugar |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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