Correlation Between Multi Units and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both Multi Units and SPDR Barclays 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 Multi Units and SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Units Luxembourg and SPDR Barclays Capital, you can compare the effects of market volatilities on Multi Units and SPDR Barclays 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 Multi Units with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Units and SPDR Barclays.
Diversification Opportunities for Multi Units and SPDR Barclays
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multi and SPDR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units Luxembourg and SPDR Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Capital and Multi Units 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 Multi Units Luxembourg are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Capital has no effect on the direction of Multi Units i.e., Multi Units and SPDR Barclays go up and down completely randomly.
Pair Corralation between Multi Units and SPDR Barclays
Assuming the 90 days trading horizon Multi Units Luxembourg is expected to generate 9.99 times more return on investment than SPDR Barclays. However, Multi Units is 9.99 times more volatile than SPDR Barclays Capital. It trades about 0.18 of its potential returns per unit of risk. SPDR Barclays Capital is currently generating about 0.18 per unit of risk. If you would invest 17,224 in Multi Units Luxembourg on November 2, 2024 and sell it today you would earn a total of 2,730 from holding Multi Units Luxembourg or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.06% |
| Values | Daily Returns |
Multi Units Luxembourg vs. SPDR Barclays Capital
Performance |
| Timeline |
| Multi Units Luxembourg |
| SPDR Barclays Capital |
Multi Units and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Units and SPDR Barclays
The main advantage of trading using opposite Multi Units and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Units position performs unexpectedly, SPDR Barclays 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 Barclays will offset losses from the drop in SPDR Barclays' long position.| Multi Units vs. Lyxor UCITS Stoxx | Multi Units vs. Multi Units Luxembourg | Multi Units vs. Multi Units France | Multi Units vs. Amundi Index Solutions |
| SPDR Barclays vs. SPDR MSCI Europe | SPDR Barclays vs. SPDR MSCI Europe | SPDR Barclays vs. SPDR Barclays Cap | SPDR Barclays vs. SPDR SP 500 |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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