Correlation Between SPDR MSCI and SPDR DoubleLine
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and SPDR DoubleLine 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 MSCI and SPDR DoubleLine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI EAFE and SPDR DoubleLine Emerging, you can compare the effects of market volatilities on SPDR MSCI and SPDR DoubleLine 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 MSCI with a short position of SPDR DoubleLine. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and SPDR DoubleLine.
Diversification Opportunities for SPDR MSCI and SPDR DoubleLine
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and SPDR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI EAFE and SPDR DoubleLine Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR DoubleLine Emerging and SPDR MSCI 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 MSCI EAFE are associated (or correlated) with SPDR DoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR DoubleLine Emerging has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and SPDR DoubleLine go up and down completely randomly.
Pair Corralation between SPDR MSCI and SPDR DoubleLine
Given the investment horizon of 90 days SPDR MSCI EAFE is expected to under-perform the SPDR DoubleLine. In addition to that, SPDR MSCI is 5.51 times more volatile than SPDR DoubleLine Emerging. It trades about -0.03 of its total potential returns per unit of risk. SPDR DoubleLine Emerging is currently generating about 0.1 per unit of volatility. If you would invest 4,269 in SPDR DoubleLine Emerging on September 3, 2024 and sell it today you would earn a total of 13.00 from holding SPDR DoubleLine Emerging or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR MSCI EAFE vs. SPDR DoubleLine Emerging
Performance |
| Timeline |
| SPDR MSCI EAFE |
| SPDR DoubleLine Emerging |
SPDR MSCI and SPDR DoubleLine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and SPDR DoubleLine
The main advantage of trading using opposite SPDR MSCI and SPDR DoubleLine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, SPDR DoubleLine 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 DoubleLine will offset losses from the drop in SPDR DoubleLine's long position.| SPDR MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR MSCI USA | SPDR MSCI vs. SPDR MSCI World | SPDR MSCI vs. SPDR SSGA Large |
| SPDR DoubleLine vs. SPDR DoubleLine Short | SPDR DoubleLine vs. SPDR SSgA Ultra | SPDR DoubleLine vs. SPDR MSCI Emerging | SPDR DoubleLine vs. SPDR Bloomberg International |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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