Correlation Between SPDR Bloomberg and Xtrackers International

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

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

Diversification Opportunities for SPDR Bloomberg and Xtrackers International

0.88

Correlation Coefficient

SPDR Bloomberg  Xtrackers International

Very poor diversification

The 3 months correlation between SPDR and Xtrackers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Emerging and Xtrackers International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers International 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 Emerging are associated (or correlated) with Xtrackers International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers International has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and Xtrackers International go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and Xtrackers International

Given the investment horizon of 90 days SPDR Bloomberg Emerging is expected to generate 0.57 times more return on investment than Xtrackers International. However, SPDR Bloomberg Emerging is 1.77 times less risky than Xtrackers International. It trades about 0.12 of its potential returns per unit of risk. Xtrackers International Real is currently generating about 0.06 per unit of risk. If you would invest  1,940  in SPDR Bloomberg Emerging on December 29, 2024 and sell it today you would earn a total of  61.00  from holding SPDR Bloomberg Emerging or generate 3.14% return on investment over 90 days.

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

SPDR Bloomberg Emerging  vs.  Xtrackers International Real

SPDR Bloomberg Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Emerging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Xtrackers International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers International Real are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Xtrackers International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR Bloomberg and Xtrackers International

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

The idea behind SPDR Bloomberg Emerging and Xtrackers International Real 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.