Correlation Between VictoryShares THB and SPDR Galaxy

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

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

Diversification Opportunities for VictoryShares THB and SPDR Galaxy

0.32

Correlation Coefficient

VictoryShares THB  SPDR Galaxy

Weak diversification

The 3 months correlation between VictoryShares and SPDR is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid 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 VictoryShares THB 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 VictoryShares THB Mid 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 VictoryShares THB i.e., VictoryShares THB and SPDR Galaxy go up and down completely randomly.

Pair Corralation between VictoryShares THB and SPDR Galaxy

Given the investment horizon of 90 days VictoryShares THB is expected to generate 10.88 times less return on investment than SPDR Galaxy. But when comparing it to its historical volatility, VictoryShares THB Mid is 3.67 times less risky than SPDR Galaxy. It trades about 0.05 of its potential returns per unit of risk. SPDR Galaxy Digital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,490  in SPDR Galaxy Digital on October 22, 2024 and sell it today you would earn a total of  1,290  from holding SPDR Galaxy Digital or generate 51.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	72.8%
Values	Daily Returns

VictoryShares THB Mid  vs.  SPDR Galaxy Digital

VictoryShares THB Mid

Risk-Adjusted Performance

0 of 100

Very Weak

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

SPDR Galaxy Digital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Galaxy Digital are ranked lower than 6 (%) 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 VictoryShares THB and SPDR Galaxy

The main advantage of trading using opposite VictoryShares THB and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares THB 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 VictoryShares THB Mid 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.