Correlation Between SPDR Barclays and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and SPDR Dow 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 Barclays and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays 10 and SPDR Dow Jones, you can compare the effects of market volatilities on SPDR Barclays and SPDR Dow 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 Barclays with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and SPDR Dow.
Diversification Opportunities for SPDR Barclays and SPDR Dow
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and SPDR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays 10 and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and SPDR Barclays 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 Barclays 10 are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and SPDR Dow go up and down completely randomly.
Pair Corralation between SPDR Barclays and SPDR Dow
Assuming the 90 days trading horizon SPDR Barclays is expected to generate 2.92 times less return on investment than SPDR Dow. But when comparing it to its historical volatility, SPDR Barclays 10 is 1.22 times less risky than SPDR Dow. It trades about 0.06 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,142 in SPDR Dow Jones on August 30, 2024 and sell it today you would earn a total of 449.00 from holding SPDR Dow Jones or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays 10 vs. SPDR Dow Jones
Performance |
| Timeline |
| SPDR Barclays 10 |
| SPDR Dow Jones |
SPDR Barclays and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and SPDR Dow
The main advantage of trading using opposite SPDR Barclays and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow's long position.| SPDR Barclays vs. Vanguard FTSE Developed | SPDR Barclays vs. Leverage Shares 2x | SPDR Barclays vs. Amundi Index Solutions | SPDR Barclays vs. Amundi Index Solutions |
| SPDR Dow vs. iShares Treasury Bond | SPDR Dow vs. iShares Treasury Bond | SPDR Dow vs. Amundi Treasury Bond | SPDR Dow vs. SPDR Barclays 10 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |