Correlation Between SPDR SP and VictoryShares

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

By analyzing existing cross correlation between SPDR SP 400 and VictoryShares, you can compare the effects of market volatilities on SPDR SP and VictoryShares 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 SP with a short position of VictoryShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and VictoryShares.

Diversification Opportunities for SPDR SP and VictoryShares

0.0

Correlation Coefficient

SPDR SP  VictoryShares

Pay attention - limited upside

The 3 months correlation between SPDR and VictoryShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and VictoryShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares and SPDR SP 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 SP 400 are associated (or correlated) with VictoryShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares has no effect on the direction of SPDR SP i.e., SPDR SP and VictoryShares go up and down completely randomly.

Pair Corralation between SPDR SP and VictoryShares

If you would invest  6,381  in SPDR SP 400 on December 4, 2024 and sell it today you would earn a total of  1,915  from holding SPDR SP 400 or generate 30.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SPDR SP 400  vs.  VictoryShares

SPDR SP 400

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 400 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

VictoryShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VictoryShares is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR SP and VictoryShares

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

The idea behind SPDR SP 400 and VictoryShares 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.