Correlation Between SPDR Barclays and AST Groupe

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

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

Diversification Opportunities for SPDR Barclays and AST Groupe

0.0

Correlation Coefficient

SPDR Barclays  AST Groupe

Pay attention - limited upside

The 3 months correlation between SPDR and AST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Euro and AST Groupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AST Groupe and SPDR Barclays 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 Barclays Euro are associated (or correlated) with AST Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AST Groupe has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and AST Groupe go up and down completely randomly.

Pair Corralation between SPDR Barclays and AST Groupe

Assuming the 90 days trading horizon SPDR Barclays Euro is expected to generate 0.25 times more return on investment than AST Groupe. However, SPDR Barclays Euro is 4.0 times less risky than AST Groupe. It trades about 0.02 of its potential returns per unit of risk. AST Groupe is currently generating about -0.04 per unit of risk. If you would invest  4,904  in SPDR Barclays Euro on October 12, 2024 and sell it today you would earn a total of  463.00  from holding SPDR Barclays Euro or generate 9.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.81%
Values	Daily Returns

SPDR Barclays Euro  vs.  AST Groupe

SPDR Barclays Euro

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Euro are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AST Groupe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AST Groupe has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, AST Groupe is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPDR Barclays and AST Groupe

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

The idea behind SPDR Barclays Euro and AST Groupe 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.