Correlation Between SPDR Barclays and SPDR Barclays

Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and SPDR Barclays 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 SPDR Barclays 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 SPDR Barclays 3 5, you can compare the effects of market volatilities on SPDR Barclays and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and SPDR Barclays.

Diversification Opportunities for SPDR Barclays and SPDR Barclays

0.8

Correlation Coefficient

SPDR Barclays  SPDR Barclays

Very poor diversification

The 3 months correlation between SPDR and SPDR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays 10 and SPDR Barclays 3 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays 3 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 SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays 3 has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and SPDR Barclays go up and down completely randomly.

Pair Corralation between SPDR Barclays and SPDR Barclays

Assuming the 90 days trading horizon SPDR Barclays 10 is expected to under-perform the SPDR Barclays. In addition to that, SPDR Barclays is 1.25 times more volatile than SPDR Barclays 3 5. It trades about -0.12 of its total potential returns per unit of risk. SPDR Barclays 3 5 is currently generating about -0.02 per unit of volatility. If you would invest  2,599  in SPDR Barclays 3 5 on December 29, 2024 and sell it today you would lose (23.00) from holding SPDR Barclays 3 5 or give up 0.88% of portfolio value over 90 days.

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

SPDR Barclays 10  vs.  SPDR Barclays 3 5

SPDR Barclays 10

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Barclays 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, SPDR Barclays is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SPDR Barclays 3

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Barclays 3 5 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR Barclays and SPDR Barclays

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

The idea behind SPDR Barclays 10 and SPDR Barclays 3 5 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.