Correlation Between VR and SPDR SP

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

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

Diversification Opportunities for VR and SPDR SP

0.0

Correlation Coefficient

VR  SPDR SP

Pay attention - limited upside

The 3 months correlation between VR and SPDR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VR 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 VR 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 VR 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 VR i.e., VR and SPDR SP go up and down completely randomly.

Pair Corralation between VR and SPDR SP

If you would invest  5,271  in SPDR SP Global on December 2, 2024 and sell it today you would lose (40.00) from holding SPDR SP Global or give up 0.76% of portfolio value over 90 days.

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

VR  vs.  SPDR SP Global

VR

Risk-Adjusted Performance

Very Weak

Over the last 90 days VR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, VR is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

SPDR SP Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SPDR SP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VR and SPDR SP

The main advantage of trading using opposite VR and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VR 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 VR 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..