Correlation Between VictoryShares THB and SPDR SP

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

Diversification Opportunities for VictoryShares THB and SPDR SP

0.62

Correlation Coefficient

VictoryShares THB  SPDR SP

Poor diversification

The 3 months correlation between VictoryShares and SPDR is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and SPDR SP go up and down completely randomly.

Pair Corralation between VictoryShares THB and SPDR SP

Given the investment horizon of 90 days VictoryShares THB is expected to generate 1.21 times less return on investment than SPDR SP. In addition to that, VictoryShares THB is 1.28 times more volatile than SPDR SP Global. It trades about 0.26 of its total potential returns per unit of risk. SPDR SP Global is currently generating about 0.4 per unit of volatility. If you would invest  5,926  in SPDR SP Global on October 24, 2024 and sell it today you would earn a total of  299.00  from holding SPDR SP Global or generate 5.05% return on investment over 90 days.

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

VictoryShares THB Mid  vs.  SPDR SP Global

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 SP Global

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, SPDR SP is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VictoryShares THB and SPDR SP

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

The idea behind VictoryShares THB Mid and SPDR SP Global 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.