Correlation Between Teucrium Soybean and SPDR Gold

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Can any of the company-specific risk be diversified away by investing in both Teucrium Soybean and SPDR 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 Teucrium Soybean and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teucrium Soybean and SPDR Gold Shares, you can compare the effects of market volatilities on Teucrium Soybean and SPDR 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 Teucrium Soybean with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teucrium Soybean and SPDR Gold.

Diversification Opportunities for Teucrium Soybean and SPDR Gold

-0.12
  Correlation Coefficient

Good diversification

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

Pair Corralation between Teucrium Soybean and SPDR Gold

Given the investment horizon of 90 days Teucrium Soybean is expected to under-perform the SPDR Gold. But the etf apears to be less risky and, when comparing its historical volatility, Teucrium Soybean is 1.4 times less risky than SPDR Gold. The etf trades about -0.15 of its potential returns per unit of risk. The SPDR Gold Shares is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  25,122  in SPDR Gold Shares on September 20, 2024 and sell it today you would lose (1,196) from holding SPDR Gold Shares or give up 4.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Teucrium Soybean  vs.  SPDR Gold Shares

 Performance 
       Timeline  
Teucrium Soybean 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Teucrium Soybean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.
SPDR Gold Shares 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SPDR Gold Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, SPDR Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Teucrium Soybean and SPDR Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Teucrium Soybean and SPDR Gold

The main advantage of trading using opposite Teucrium Soybean and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teucrium Soybean position performs unexpectedly, SPDR 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 SPDR Gold will offset losses from the drop in SPDR Gold's long position.
The idea behind Teucrium Soybean and SPDR Gold Shares 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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