Correlation Between SPDR Bloomberg and VanEck JP

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

By analyzing existing cross correlation between SPDR Bloomberg Short and VanEck JP Morgan, you can compare the effects of market volatilities on SPDR Bloomberg and VanEck JP 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 JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and VanEck JP.

Diversification Opportunities for SPDR Bloomberg and VanEck JP

0.98

Correlation Coefficient

SPDR Bloomberg  VanEck JP

Almost no diversification

The 3 months correlation between SPDR and VanEck is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Short and VanEck JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck JP Morgan 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 Short are associated (or correlated) with VanEck JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck JP Morgan has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and VanEck JP go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and VanEck JP

Considering the 90-day investment horizon SPDR Bloomberg is expected to generate 1.39 times less return on investment than VanEck JP. But when comparing it to its historical volatility, SPDR Bloomberg Short is 1.03 times less risky than VanEck JP. It trades about 0.03 of its potential returns per unit of risk. VanEck JP Morgan is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,310  in VanEck JP Morgan on September 19, 2024 and sell it today you would earn a total of  44.50  from holding VanEck JP Morgan or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.21%
Values	Daily Returns

SPDR Bloomberg Short  vs.  VanEck JP Morgan

SPDR Bloomberg Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Bloomberg Short 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 JP Morgan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SPDR Bloomberg and VanEck JP

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

The idea behind SPDR Bloomberg Short and VanEck JP Morgan 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.