Correlation Between SPDR Gold and GraniteShares Gold

Can any of the company-specific risk be diversified away by investing in both SPDR Gold and GraniteShares 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 Gold and GraniteShares Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR Gold MiniShares and GraniteShares Gold Trust, you can compare the effects of market volatilities on SPDR Gold and GraniteShares 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 Gold with a short position of GraniteShares Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and GraniteShares Gold.

Diversification Opportunities for SPDR Gold and GraniteShares Gold

1.0

Correlation Coefficient

SPDR Gold  GraniteShares Gold

No risk reduction

The 3 months correlation between SPDR and GraniteShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold MiniShares and GraniteShares Gold Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares Gold 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 MiniShares are associated (or correlated) with GraniteShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares Gold Trust has no effect on the direction of SPDR Gold i.e., SPDR Gold and GraniteShares Gold go up and down completely randomly.

Pair Corralation between SPDR Gold and GraniteShares Gold

Given the investment horizon of 90 days SPDR Gold MiniShares is expected to generate 1.07 times more return on investment than GraniteShares Gold. However, SPDR Gold is 1.07 times more volatile than GraniteShares Gold Trust. It trades about 0.33 of its potential returns per unit of risk. GraniteShares Gold Trust is currently generating about 0.35 per unit of risk. If you would invest  5,165  in SPDR Gold MiniShares on December 30, 2024 and sell it today you would earn a total of  938.00  from holding SPDR Gold MiniShares or generate 18.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

SPDR Gold MiniShares  vs.  GraniteShares Gold Trust

SPDR Gold MiniShares

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold MiniShares are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, SPDR Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

GraniteShares Gold Trust

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Gold Trust are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, GraniteShares Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Gold and GraniteShares Gold

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

The idea behind SPDR Gold MiniShares and GraniteShares 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.