Correlation Between Strategy Shares and SPDR Bloomberg

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

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

Diversification Opportunities for Strategy Shares and SPDR Bloomberg

0.92

Correlation Coefficient

Strategy Shares  SPDR Bloomberg

Almost no diversification

The 3 months correlation between Strategy and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares and SPDR Bloomberg Barclays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Barclays and Strategy Shares 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 Strategy Shares are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Barclays has no effect on the direction of Strategy Shares i.e., Strategy Shares and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between Strategy Shares and SPDR Bloomberg

Given the investment horizon of 90 days Strategy Shares is expected to under-perform the SPDR Bloomberg. But the etf apears to be less risky and, when comparing its historical volatility, Strategy Shares is 1.17 times less risky than SPDR Bloomberg. The etf trades about -0.17 of its potential returns per unit of risk. The SPDR Bloomberg Barclays is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  2,476  in SPDR Bloomberg Barclays on September 19, 2024 and sell it today you would lose (79.00) from holding SPDR Bloomberg Barclays or give up 3.19% of portfolio value over 90 days.

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

Strategy Shares   vs.  SPDR Bloomberg Barclays

Strategy Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategy Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Strategy Shares is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

SPDR Bloomberg Barclays

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Bloomberg Barclays has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Strategy Shares and SPDR Bloomberg

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

The idea behind Strategy Shares and SPDR Bloomberg Barclays 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.