Correlation Between SPDR FTSE and SPDR Bloomberg

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

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

Diversification Opportunities for SPDR FTSE and SPDR Bloomberg

0.96

Correlation Coefficient

SPDR FTSE  SPDR Bloomberg

Almost no diversification

The 3 months correlation between SPDR and SPDR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR FTSE International and SPDR Bloomberg International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Inter and SPDR FTSE 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 FTSE International 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 Inter has no effect on the direction of SPDR FTSE i.e., SPDR FTSE and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between SPDR FTSE and SPDR Bloomberg

Considering the 90-day investment horizon SPDR FTSE International is expected to generate 1.47 times more return on investment than SPDR Bloomberg. However, SPDR FTSE is 1.47 times more volatile than SPDR Bloomberg International. It trades about 0.08 of its potential returns per unit of risk. SPDR Bloomberg International is currently generating about 0.05 per unit of risk. If you would invest  3,640  in SPDR FTSE International on December 26, 2024 and sell it today you would earn a total of  111.00  from holding SPDR FTSE International or generate 3.05% return on investment over 90 days.

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

SPDR FTSE International  vs.  SPDR Bloomberg International

SPDR FTSE International

Risk-Adjusted Performance

Modest

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

SPDR Bloomberg Inter

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR FTSE and SPDR Bloomberg

The main advantage of trading using opposite SPDR FTSE and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FTSE 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 SPDR FTSE International and SPDR Bloomberg International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.