Correlation Between NYSE Composite and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and SPDR Barclays Short, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SPDR Barclays.
Diversification Opportunities for NYSE Composite and SPDR Barclays
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and SPDR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SPDR Barclays Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Short and NYSE Composite 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 NYSE Composite 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 Short has no effect on the direction of NYSE Composite i.e., NYSE Composite and SPDR Barclays go up and down completely randomly.
Pair Corralation between NYSE Composite and SPDR Barclays
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.88 times more return on investment than SPDR Barclays. However, NYSE Composite is 7.88 times more volatile than SPDR Barclays Short. It trades about 0.24 of its potential returns per unit of risk. SPDR Barclays Short is currently generating about 0.02 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. SPDR Barclays Short
Performance |
| Timeline |
NYSE Composite and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SPDR Barclays Short
Pair trading matchups for SPDR Barclays
Pair Trading with NYSE Composite and SPDR Barclays
The main advantage of trading using opposite NYSE Composite and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| SPDR Barclays vs. SPDR Barclays Long | SPDR Barclays vs. SPDR Portfolio Intermediate | SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. SPDR Barclays Intermediate |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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