Correlation Between Main International and SPDR Galaxy

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

By analyzing existing cross correlation between Main International ETF and SPDR Galaxy Digital, you can compare the effects of market volatilities on Main International and SPDR Galaxy 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 Main International with a short position of SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main International and SPDR Galaxy.

Diversification Opportunities for Main International and SPDR Galaxy

-0.56

Correlation Coefficient

Main International  SPDR Galaxy

Excellent diversification

The 3 months correlation between Main and SPDR is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Main International ETF and SPDR Galaxy Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Digital and Main International 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 Main International ETF are associated (or correlated) with SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Digital has no effect on the direction of Main International i.e., Main International and SPDR Galaxy go up and down completely randomly.

Pair Corralation between Main International and SPDR Galaxy

Given the investment horizon of 90 days Main International ETF is expected to generate 0.16 times more return on investment than SPDR Galaxy. However, Main International ETF is 6.29 times less risky than SPDR Galaxy. It trades about -0.2 of its potential returns per unit of risk. SPDR Galaxy Digital is currently generating about -0.03 per unit of risk. If you would invest  2,293  in Main International ETF on October 9, 2024 and sell it today you would lose (62.00) from holding Main International ETF or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Main International ETF  vs.  SPDR Galaxy Digital

Main International ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Main International ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Main International is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

SPDR Galaxy Digital

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Galaxy Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, SPDR Galaxy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Main International and SPDR Galaxy

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

The idea behind Main International ETF and SPDR Galaxy Digital 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.