Correlation Between SPDR Bloomberg and SPDR Russell

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

By analyzing existing cross correlation between SPDR Bloomberg Global and SPDR Russell 2000, you can compare the effects of market volatilities on SPDR Bloomberg and SPDR Russell 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 SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and SPDR Russell.

Diversification Opportunities for SPDR Bloomberg and SPDR Russell

0.08

Correlation Coefficient

SPDR Bloomberg  SPDR Russell

Significant diversification

The 3 months correlation between SPDR and SPDR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Global and SPDR Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 2000 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 Global are associated (or correlated) with SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 2000 has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and SPDR Russell go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and SPDR Russell

Assuming the 90 days trading horizon SPDR Bloomberg Global is expected to under-perform the SPDR Russell. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Bloomberg Global is 4.75 times less risky than SPDR Russell. The etf trades about -0.14 of its potential returns per unit of risk. The SPDR Russell 2000 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  5,772  in SPDR Russell 2000 on October 22, 2024 and sell it today you would earn a total of  240.00  from holding SPDR Russell 2000 or generate 4.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

SPDR Bloomberg Global  vs.  SPDR Russell 2000

SPDR Bloomberg Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

SPDR Russell 2000

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Russell 2000 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SPDR Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SPDR Bloomberg and SPDR Russell

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

The idea behind SPDR Bloomberg Global and SPDR Russell 2000 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.