Correlation Between SPDR Barclays and Vanguard USD

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

By analyzing existing cross correlation between SPDR Barclays 10 and Vanguard USD Corporate, you can compare the effects of market volatilities on SPDR Barclays and Vanguard USD 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 Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Vanguard USD.

Diversification Opportunities for SPDR Barclays and Vanguard USD

-0.7

Correlation Coefficient

SPDR Barclays  Vanguard USD

Excellent diversification

The 3 months correlation between SPDR and Vanguard is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays 10 and Vanguard USD Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Corporate 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 10 are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Corporate has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Vanguard USD go up and down completely randomly.

Pair Corralation between SPDR Barclays and Vanguard USD

Assuming the 90 days trading horizon SPDR Barclays 10 is expected to under-perform the Vanguard USD. In addition to that, SPDR Barclays is 1.84 times more volatile than Vanguard USD Corporate. It trades about -0.08 of its total potential returns per unit of risk. Vanguard USD Corporate is currently generating about 0.16 per unit of volatility. If you would invest  4,358  in Vanguard USD Corporate on September 5, 2024 and sell it today you would earn a total of  194.00  from holding Vanguard USD Corporate or generate 4.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

SPDR Barclays 10  vs.  Vanguard USD Corporate

SPDR Barclays 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Barclays 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SPDR Barclays is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Vanguard USD Corporate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard USD Corporate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vanguard USD is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR Barclays and Vanguard USD

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

The idea behind SPDR Barclays 10 and Vanguard USD Corporate 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.