Correlation Between SPDR SP and VanEck Low

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

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

Diversification Opportunities for SPDR SP and VanEck Low

-0.14

Correlation Coefficient

SPDR SP  VanEck Low

Good diversification

The 3 months correlation between SPDR and VanEck is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and VanEck Low Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Low Carbon and SPDR SP 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 SP Oil are associated (or correlated) with VanEck Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Low Carbon has no effect on the direction of SPDR SP i.e., SPDR SP and VanEck Low go up and down completely randomly.

Pair Corralation between SPDR SP and VanEck Low

Considering the 90-day investment horizon SPDR SP Oil is expected to generate 1.17 times more return on investment than VanEck Low. However, SPDR SP is 1.17 times more volatile than VanEck Low Carbon. It trades about 0.01 of its potential returns per unit of risk. VanEck Low Carbon is currently generating about -0.01 per unit of risk. If you would invest  13,276  in SPDR SP Oil on October 7, 2024 and sell it today you would earn a total of  281.00  from holding SPDR SP Oil or generate 2.12% return on investment over 90 days.

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

SPDR SP Oil  vs.  VanEck Low Carbon

SPDR SP Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Oil 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 recent stock price agitation, may contribute to short-term losses for the retail investors.

VanEck Low Carbon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Low Carbon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with SPDR SP and VanEck Low

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

The idea behind SPDR SP Oil and VanEck Low Carbon 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.