Correlation Between SPDR FTSE and BB Biotech
Can any of the company-specific risk be diversified away by investing in both SPDR FTSE and BB Biotech 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 BB Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR FTSE UK and BB Biotech AG, you can compare the effects of market volatilities on SPDR FTSE and BB Biotech 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 BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR FTSE and BB Biotech.
Diversification Opportunities for SPDR FTSE and BB Biotech
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and BION is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SPDR FTSE UK and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech AG 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 UK are associated (or correlated) with BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of SPDR FTSE i.e., SPDR FTSE and BB Biotech go up and down completely randomly.
Pair Corralation between SPDR FTSE and BB Biotech
Assuming the 90 days trading horizon SPDR FTSE UK is expected to generate 0.91 times more return on investment than BB Biotech. However, SPDR FTSE UK is 1.1 times less risky than BB Biotech. It trades about 0.0 of its potential returns per unit of risk. BB Biotech AG is currently generating about -0.04 per unit of risk. If you would invest 617.00 in SPDR FTSE UK on September 19, 2024 and sell it today you would lose (3.00) from holding SPDR FTSE UK or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
SPDR FTSE UK vs. BB Biotech AG
Performance |
| Timeline |
| SPDR FTSE UK |
| BB Biotech AG |
SPDR FTSE and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR FTSE and BB Biotech
The main advantage of trading using opposite SPDR FTSE and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FTSE position performs unexpectedly, BB Biotech 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 BB Biotech will offset losses from the drop in BB Biotech's long position.| SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR SP Utilities | SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR MSCI EM |
| BB Biotech vs. Swiss Life Holding | BB Biotech vs. Swiss Re AG | BB Biotech vs. Helvetia Holding AG | BB Biotech vs. Partners Group Holding |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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