Correlation Between Scientific Games and SPDR Gold

Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Scientific Games and SPDR Gold Shares, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and SPDR Gold.

Diversification Opportunities for Scientific Games and SPDR Gold

0.55

Correlation Coefficient

Scientific Games  SPDR Gold

Very weak diversification

The 3 months correlation between Scientific and SPDR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games 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 Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and SPDR Gold go up and down completely randomly.

Pair Corralation between Scientific Games and SPDR Gold

Assuming the 90 days horizon Scientific Games is expected to generate 2.53 times more return on investment than SPDR Gold. However, Scientific Games is 2.53 times more volatile than SPDR Gold Shares. It trades about 0.12 of its potential returns per unit of risk. SPDR Gold Shares is currently generating about 0.19 per unit of risk. If you would invest  8,100  in Scientific Games on December 23, 2024 and sell it today you would earn a total of  1,400  from holding Scientific Games or generate 17.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Scientific Games  vs.  SPDR Gold Shares

Scientific Games

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scientific Games are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Scientific Games reported solid returns over the last few months and may actually be approaching a breakup point.

SPDR Gold Shares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, SPDR Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Scientific Games and SPDR Gold

The main advantage of trading using opposite Scientific Games and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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 Scientific Games 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.