Correlation Between SPDR Gold and VIENNA INSURANCE

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

Diversification Opportunities for SPDR Gold and VIENNA INSURANCE

0.76

Correlation Coefficient

SPDR Gold  VIENNA INSURANCE

Poor diversification

The 3 months correlation between SPDR and VIENNA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and VIENNA INSURANCE GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIENNA INSURANCE 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 VIENNA INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIENNA INSURANCE has no effect on the direction of SPDR Gold i.e., SPDR Gold and VIENNA INSURANCE go up and down completely randomly.

Pair Corralation between SPDR Gold and VIENNA INSURANCE

Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 1.48 times more return on investment than VIENNA INSURANCE. However, SPDR Gold is 1.48 times more volatile than VIENNA INSURANCE GR. It trades about 0.07 of its potential returns per unit of risk. VIENNA INSURANCE GR is currently generating about 0.05 per unit of risk. If you would invest  23,424  in SPDR Gold Shares on October 26, 2024 and sell it today you would earn a total of  964.00  from holding SPDR Gold Shares or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

SPDR Gold Shares  vs.  VIENNA INSURANCE GR

SPDR Gold Shares

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SPDR Gold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

VIENNA INSURANCE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VIENNA INSURANCE GR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, VIENNA INSURANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR Gold and VIENNA INSURANCE

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

The idea behind SPDR Gold Shares and VIENNA INSURANCE GR 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.