Correlation Between SPDR Barclays and Memscap Regpt

Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Memscap Regpt 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 Memscap Regpt 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 Memscap Regpt, you can compare the effects of market volatilities on SPDR Barclays and Memscap Regpt 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 Memscap Regpt. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Memscap Regpt.

Diversification Opportunities for SPDR Barclays and Memscap Regpt

0.08

Correlation Coefficient

SPDR Barclays  Memscap Regpt

Significant diversification

The 3 months correlation between SPDR and Memscap is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Euro and Memscap Regpt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Memscap Regpt 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 Memscap Regpt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Memscap Regpt has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Memscap Regpt go up and down completely randomly.

Pair Corralation between SPDR Barclays and Memscap Regpt

Assuming the 90 days trading horizon SPDR Barclays Euro is expected to under-perform the Memscap Regpt. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Barclays Euro is 31.3 times less risky than Memscap Regpt. The etf trades about -0.32 of its potential returns per unit of risk. The Memscap Regpt is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Memscap Regpt on October 5, 2024 and sell it today you would earn a total of  164.00  from holding Memscap Regpt or generate 48.24% return on investment over 90 days.

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

SPDR Barclays Euro  vs.  Memscap Regpt

SPDR Barclays Euro

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Euro are ranked lower than 7 (%) 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.

Memscap Regpt

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Memscap Regpt are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Memscap Regpt sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Barclays and Memscap Regpt

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

The idea behind SPDR Barclays Euro and Memscap Regpt 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .