Correlation Between SPDR Gold and Expat Czech

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

Diversification Opportunities for SPDR Gold and Expat Czech

0.48

Correlation Coefficient

SPDR Gold  Expat Czech

Very weak diversification

The 3 months correlation between SPDR and Expat is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Expat Czech PX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Czech PX 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 Expat Czech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Czech PX has no effect on the direction of SPDR Gold i.e., SPDR Gold and Expat Czech go up and down completely randomly.

Pair Corralation between SPDR Gold and Expat Czech

Assuming the 90 days trading horizon SPDR Gold is expected to generate 1.16 times less return on investment than Expat Czech. But when comparing it to its historical volatility, SPDR Gold Shares is 2.62 times less risky than Expat Czech. It trades about 0.22 of its potential returns per unit of risk. Expat Czech PX is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  143.00  in Expat Czech PX on December 26, 2024 and sell it today you would earn a total of  19.00  from holding Expat Czech PX or generate 13.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.33%
Values	Daily Returns

SPDR Gold Shares  vs.  Expat Czech PX

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 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SPDR Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Expat Czech PX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Expat Czech PX are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Expat Czech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Gold and Expat Czech

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

The idea behind SPDR Gold Shares and Expat Czech PX 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.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.