Correlation Between SPDR SP and Barloworld
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Barloworld 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 Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Kensho and Barloworld Ltd ADR, you can compare the effects of market volatilities on SPDR SP and Barloworld 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 Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Barloworld.
Diversification Opportunities for SPDR SP and Barloworld
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and Barloworld is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Kensho and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR 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 Kensho are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of SPDR SP i.e., SPDR SP and Barloworld go up and down completely randomly.
Pair Corralation between SPDR SP and Barloworld
Given the investment horizon of 90 days SPDR SP Kensho is expected to generate 0.27 times more return on investment than Barloworld. However, SPDR SP Kensho is 3.65 times less risky than Barloworld. It trades about 0.28 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.07 per unit of risk. If you would invest 6,269 in SPDR SP Kensho on August 27, 2024 and sell it today you would earn a total of 590.00 from holding SPDR SP Kensho or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Kensho vs. Barloworld Ltd ADR
Performance |
| Timeline |
| SPDR SP Kensho |
| Barloworld ADR |
SPDR SP and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Barloworld
The main advantage of trading using opposite SPDR SP and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| SPDR SP vs. Invesco DWA Utilities | SPDR SP vs. Invesco Dynamic Large | SPDR SP vs. Invesco Dynamic Large | SPDR SP vs. HUMANA INC |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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