Correlation Between Invesco DB and SPDR Gold
Can any of the company-specific risk be diversified away by investing in both Invesco DB 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 Invesco DB and SPDR Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DB Agriculture and SPDR Gold MiniShares, you can compare the effects of market volatilities on Invesco DB 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 Invesco DB with a short position of SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DB and SPDR Gold.
Diversification Opportunities for Invesco DB and SPDR Gold
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DB Agriculture and SPDR Gold MiniShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Gold MiniShares and Invesco DB 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 Invesco DB Agriculture 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 MiniShares has no effect on the direction of Invesco DB i.e., Invesco DB and SPDR Gold go up and down completely randomly.
Pair Corralation between Invesco DB and SPDR Gold
Considering the 90-day investment horizon Invesco DB Agriculture is expected to under-perform the SPDR Gold. In addition to that, Invesco DB is 1.53 times more volatile than SPDR Gold MiniShares. It trades about -0.13 of its total potential returns per unit of risk. SPDR Gold MiniShares is currently generating about 0.01 per unit of volatility. If you would invest 4,557 in SPDR Gold MiniShares on February 3, 2024 and sell it today you would earn a total of 9.00 from holding SPDR Gold MiniShares or generate 0.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco DB Agriculture vs. SPDR Gold MiniShares
Performance |
Timeline |
Invesco DB Agriculture |
SPDR Gold MiniShares |
Invesco DB and SPDR Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco DB and SPDR Gold
The main advantage of trading using opposite Invesco DB and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DB 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.Invesco DB vs. Invesco DB Commodity | Invesco DB vs. VanEck Agribusiness ETF | Invesco DB vs. Invesco DB Base | Invesco DB vs. Teucrium Corn |
SPDR Gold vs. MicroSectors Gold 3X | SPDR Gold vs. Franklin Responsibly Sourced | SPDR Gold vs. GraniteShares Gold Trust | SPDR Gold vs. DB Gold Double |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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