Monday, September 2, 2013

Apple = Gold?

While perusing charts this weekend, I came across this relationship. Since April of last year, AAPL and GLD have been generally moving together directionally.

Source: Bloomberg

The correlation coefficient over this time period is 0.71, very high. 

I show this chart with tongue firmly planted in cheek. I'm not a huge fan of analog charts and off hand I know of no apparent reason why this relationship should exist. Always keep in mind the old adage, "correlation does not imply causation." 

But perhaps there is a fundamental, logical reason(s) for AAPL & GLD to trade roughly in-synch (a strong/weak USD?), let me know your thoughts.

Happy Labor Day!

4 comments:

  1. Apple and Gold are correlating only because people see them both as representing VALUE.

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  2. How did you calculate the correlation coefficient to be 0.71? How many periods did you take into acocunt? Your number is way off.

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  3. Have we ruled out randomness? Or does everything have to have an explanation?
    When you toss an unbiased coin millions of times, there will be situations when there *might* be an inexplicably huge streak of tails or heads. And that's just going to be a lucky hour in a lucky day! There is no explanation.

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  4. 1) he probably calculated correlation over the time period represented on the chart.

    2) he didn't rule out randomness, ie his "correlation / Causation" comment.

    3) I think the 1 similarity they both have, which is why i think it is an interest overlay, is that both apple and gold went through years of absolutely massive accumulation. When the story changes, the process of mass "de-accumulation" has many similarities in form, regardless of the asset.

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