Correlation Between SPDR Bloomberg and VanEck Green

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

By analyzing existing cross correlation between SPDR Bloomberg International and VanEck Green Bond, you can compare the effects of market volatilities on SPDR Bloomberg and VanEck Green 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 SPDR Bloomberg with a short position of VanEck Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and VanEck Green.

Diversification Opportunities for SPDR Bloomberg and VanEck Green

0.8

Correlation Coefficient

SPDR Bloomberg  VanEck Green

Very poor diversification

The 3 months correlation between SPDR and VanEck is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg International and VanEck Green Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Green Bond and SPDR Bloomberg 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 SPDR Bloomberg International are associated (or correlated) with VanEck Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Green Bond has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and VanEck Green go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and VanEck Green

Considering the 90-day investment horizon SPDR Bloomberg International is expected to generate 2.13 times more return on investment than VanEck Green. However, SPDR Bloomberg is 2.13 times more volatile than VanEck Green Bond. It trades about 0.21 of its potential returns per unit of risk. VanEck Green Bond is currently generating about 0.3 per unit of risk. If you would invest  2,135  in SPDR Bloomberg International on December 5, 2024 and sell it today you would earn a total of  48.00  from holding SPDR Bloomberg International or generate 2.25% return on investment over 90 days.

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

SPDR Bloomberg International  vs.  VanEck Green Bond

SPDR Bloomberg Inter

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Bloomberg International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VanEck Green Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Green Bond are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, VanEck Green is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR Bloomberg and VanEck Green

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

The idea behind SPDR Bloomberg International and VanEck Green Bond 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.