Correlation between RHT and Gold?

Discussion in 'Commodity Futures' started by DecreaseNow, Jan 27, 2011.

  1. On of the reasons I've been buying RHT (besides it being a great stock) is based on its tendency to follow gold. Do any you people that follow gold foresee any reasons why gold is not going to rebound to previous levels?
     
  2. bone

    bone

    Well, Red Hat does indeed have a 93.7% daily closing correlation with the Comex Gold future over the past 2 years, but the 5 year correlation is less than 39%. Given the fact that the RHT business model has almost zilch fundamental correlation with Gold or it's flight-to-quality or dollar replacement qualities, I would question your original premise about the relative worth of mentioning Gold in the same sentence as RHT. In other words, over the past 2 years, names like NTAP has a 98.3% positive correlation and CNQR has a 98.4% positive correlation with RHT on daily closing marks. Not only is that a better statisitical fit than Gold, it is a better fit in terms of market sector fundamentals. The spread cointegration fitness is much more consistent as well.
     
  3. I believe this is exactly the sort of effect that people normally describe as "spurious"...
     
  4. What is fundemental? Only gold producer hedging, or the software vendor for the exchange they are hedging on? And do you think the Fed is running their printing operations on Windows? Well, it wouldn't surprise me...