Correlation Between Quadratic Deflation and SPDR Barclays

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

By analyzing existing cross correlation between Quadratic Deflation ETF and SPDR Barclays Long, you can compare the effects of market volatilities on Quadratic Deflation and SPDR Barclays 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 Quadratic Deflation with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quadratic Deflation and SPDR Barclays.

Diversification Opportunities for Quadratic Deflation and SPDR Barclays

0.93

Correlation Coefficient

Quadratic Deflation  SPDR Barclays

Almost no diversification

The 3 months correlation between Quadratic and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Quadratic Deflation ETF and SPDR Barclays Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Long and Quadratic Deflation 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 Quadratic Deflation ETF are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Long has no effect on the direction of Quadratic Deflation i.e., Quadratic Deflation and SPDR Barclays go up and down completely randomly.

Pair Corralation between Quadratic Deflation and SPDR Barclays

Given the investment horizon of 90 days Quadratic Deflation is expected to generate 1.38 times less return on investment than SPDR Barclays. In addition to that, Quadratic Deflation is 1.22 times more volatile than SPDR Barclays Long. It trades about 0.09 of its total potential returns per unit of risk. SPDR Barclays Long is currently generating about 0.16 per unit of volatility. If you would invest  2,701  in SPDR Barclays Long on September 2, 2024 and sell it today you would earn a total of  86.00  from holding SPDR Barclays Long or generate 3.18% return on investment over 90 days.

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

Quadratic Deflation ETF  vs.  SPDR Barclays Long

Quadratic Deflation ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadratic Deflation ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Quadratic Deflation is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR Barclays Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Barclays Long has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SPDR Barclays is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Quadratic Deflation and SPDR Barclays

The main advantage of trading using opposite Quadratic Deflation and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quadratic Deflation position performs unexpectedly, SPDR Barclays 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 Barclays will offset losses from the drop in SPDR Barclays' long position.

The idea behind Quadratic Deflation ETF and SPDR Barclays Long 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.