Correlation Between Gold and Us Government
Can any of the company-specific risk be diversified away by investing in both Gold and Us Government 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 Gold and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold And Precious and Us Government Securities, you can compare the effects of market volatilities on Gold and Us Government 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 Gold with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold and Us Government.
Diversification Opportunities for Gold and Us Government
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and UGSDX is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities and 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 Gold And Precious are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Gold i.e., Gold and Us Government go up and down completely randomly.
Pair Corralation between Gold and Us Government
Assuming the 90 days horizon Gold And Precious is expected to generate 25.23 times more return on investment than Us Government. However, Gold is 25.23 times more volatile than Us Government Securities. It trades about 0.17 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.13 per unit of risk. If you would invest 1,717 in Gold And Precious on May 30, 2025 and sell it today you would earn a total of 304.00 from holding Gold And Precious or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold And Precious vs. Us Government Securities
Performance |
| Timeline |
| Gold And Precious |
| Us Government Securities |
Gold and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold and Us Government
The main advantage of trading using opposite Gold and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Gold vs. Jhancock Global Equity | Gold vs. Ab Global Risk | Gold vs. Gmo Global Equity | Gold vs. Dodge Global Stock |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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