Correlation Between SPDR BB and SPDR SP

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

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

Diversification Opportunities for SPDR BB and SPDR SP

0.13

Correlation Coefficient

SPDR BB  SPDR SP

Average diversification

The 3 months correlation between SPDR and SPDR is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SPDR BB SB and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend and SPDR BB 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 BB SB 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 Dividend has no effect on the direction of SPDR BB i.e., SPDR BB and SPDR SP go up and down completely randomly.

Pair Corralation between SPDR BB and SPDR SP

Assuming the 90 days trading horizon SPDR BB SB is expected to generate 0.35 times more return on investment than SPDR SP. However, SPDR BB SB is 2.89 times less risky than SPDR SP. It trades about 0.07 of its potential returns per unit of risk. SPDR SP Dividend is currently generating about -0.05 per unit of risk. If you would invest  2,607  in SPDR BB SB on December 20, 2024 and sell it today you would earn a total of  35.00  from holding SPDR BB SB or generate 1.34% return on investment over 90 days.

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

SPDR BB SB  vs.  SPDR SP Dividend

SPDR BB SB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR BB SB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR BB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR SP Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SPDR SP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR BB and SPDR SP

The main advantage of trading using opposite SPDR BB and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR BB 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 SPDR BB SB and SPDR SP Dividend 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 Commodity Directory module to find actively traded commodities issued by global exchanges.