Correlation Between SPDR Gold and ASML HOLDING

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

Diversification Opportunities for SPDR Gold and ASML HOLDING

-0.12

Correlation Coefficient

SPDR Gold  ASML HOLDING

Good diversification

The 3 months correlation between SPDR and ASML is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and ASML HOLDING NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML HOLDING NY 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 ASML HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML HOLDING NY has no effect on the direction of SPDR Gold i.e., SPDR Gold and ASML HOLDING go up and down completely randomly.

Pair Corralation between SPDR Gold and ASML HOLDING

Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 0.39 times more return on investment than ASML HOLDING. However, SPDR Gold Shares is 2.55 times less risky than ASML HOLDING. It trades about 0.21 of its potential returns per unit of risk. ASML HOLDING NY is currently generating about 0.01 per unit of risk. If you would invest  23,105  in SPDR Gold Shares on December 28, 2024 and sell it today you would earn a total of  2,997  from holding SPDR Gold Shares or generate 12.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

SPDR Gold Shares  vs.  ASML HOLDING NY

SPDR Gold Shares

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, SPDR Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ASML HOLDING NY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASML HOLDING NY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, ASML HOLDING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPDR Gold and ASML HOLDING

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

The idea behind SPDR Gold Shares and ASML HOLDING NY 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.