Correlation Between SPDR Series and VanEck Vectors

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

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

Diversification Opportunities for SPDR Series and VanEck Vectors

-0.27

Correlation Coefficient

SPDR Series  VanEck Vectors

Very good diversification

The 3 months correlation between SPDR and VanEck is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Series Trust and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF and SPDR Series 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 Series Trust are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of SPDR Series i.e., SPDR Series and VanEck Vectors go up and down completely randomly.

Pair Corralation between SPDR Series and VanEck Vectors

Assuming the 90 days trading horizon SPDR Series Trust is expected to under-perform the VanEck Vectors. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Series Trust is 1.27 times less risky than VanEck Vectors. The etf trades about -0.15 of its potential returns per unit of risk. The VanEck Vectors ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  95,700  in VanEck Vectors ETF on December 21, 2024 and sell it today you would earn a total of  13,300  from holding VanEck Vectors ETF or generate 13.9% return on investment over 90 days.

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

SPDR Series Trust  vs.  VanEck Vectors ETF

SPDR Series Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

VanEck Vectors ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, VanEck Vectors showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Series and VanEck Vectors

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

The idea behind SPDR Series Trust and VanEck Vectors ETF 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .