Correlation Between SPDR Gold and HANetf II

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

Diversification Opportunities for SPDR Gold and HANetf II

-0.13

Correlation Coefficient

SPDR Gold  HANetf II

Good diversification

The 3 months correlation between SPDR and HANetf is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and HANetf II ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf II ICAV 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 HANetf II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf II ICAV has no effect on the direction of SPDR Gold i.e., SPDR Gold and HANetf II go up and down completely randomly.

Pair Corralation between SPDR Gold and HANetf II

Assuming the 90 days trading horizon SPDR Gold Shares is expected to generate 1.51 times more return on investment than HANetf II. However, SPDR Gold is 1.51 times more volatile than HANetf II ICAV. It trades about 0.22 of its potential returns per unit of risk. HANetf II ICAV is currently generating about -0.04 per unit of risk. If you would invest  23,084  in SPDR Gold Shares on December 23, 2024 and sell it today you would earn a total of  2,562  from holding SPDR Gold Shares or generate 11.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.89%
Values	Daily Returns

SPDR Gold Shares  vs.  HANetf II ICAV

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.

HANetf II ICAV

Risk-Adjusted Performance

Very Weak

Over the last 90 days HANetf II ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, HANetf II is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR Gold and HANetf II

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

The idea behind SPDR Gold Shares and HANetf II ICAV 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.