Correlation Between VIENNA INSURANCE and SPDR Gold

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

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

Diversification Opportunities for VIENNA INSURANCE and SPDR Gold

0.38

Correlation Coefficient

VIENNA INSURANCE  SPDR Gold

Weak diversification

The 3 months correlation between VIENNA and SPDR is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding VIENNA INSURANCE GR 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 VIENNA INSURANCE 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 VIENNA INSURANCE GR 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 VIENNA INSURANCE i.e., VIENNA INSURANCE and SPDR Gold go up and down completely randomly.

Pair Corralation between VIENNA INSURANCE and SPDR Gold

Assuming the 90 days trading horizon VIENNA INSURANCE GR is expected to generate 0.66 times more return on investment than SPDR Gold. However, VIENNA INSURANCE GR is 1.52 times less risky than SPDR Gold. It trades about 0.31 of its potential returns per unit of risk. SPDR Gold Shares is currently generating about 0.04 per unit of risk. If you would invest  2,930  in VIENNA INSURANCE GR on October 11, 2024 and sell it today you would earn a total of  115.00  from holding VIENNA INSURANCE GR or generate 3.92% return on investment over 90 days.

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

VIENNA INSURANCE GR  vs.  SPDR Gold Shares

VIENNA INSURANCE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VIENNA INSURANCE GR are ranked lower than 7 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR Gold Shares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, SPDR Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VIENNA INSURANCE and SPDR Gold

The main advantage of trading using opposite VIENNA INSURANCE and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIENNA INSURANCE 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 VIENNA INSURANCE GR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.