Correlation Between SPDR Dow and Xtrackers International
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and Xtrackers International 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 Dow and Xtrackers International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and Xtrackers International Real, you can compare the effects of market volatilities on SPDR Dow and Xtrackers International 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 Dow with a short position of Xtrackers International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and Xtrackers International.
Diversification Opportunities for SPDR Dow and Xtrackers International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Xtrackers is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and Xtrackers International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers International and SPDR Dow 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 Dow Jones are associated (or correlated) with Xtrackers International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers International has no effect on the direction of SPDR Dow i.e., SPDR Dow and Xtrackers International go up and down completely randomly.
Pair Corralation between SPDR Dow and Xtrackers International
Considering the 90-day investment horizon SPDR Dow Jones is expected to under-perform the Xtrackers International. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Dow Jones is 1.12 times less risky than Xtrackers International. The etf trades about -0.26 of its potential returns per unit of risk. The Xtrackers International Real is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 2,175 in Xtrackers International Real on August 26, 2024 and sell it today you would lose (76.00) from holding Xtrackers International Real or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. Xtrackers International Real
Performance |
| Timeline |
| SPDR Dow Jones |
| Xtrackers International |
SPDR Dow and Xtrackers International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and Xtrackers International
The main advantage of trading using opposite SPDR Dow and Xtrackers International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, Xtrackers International 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 Xtrackers International will offset losses from the drop in Xtrackers International's long position.| SPDR Dow vs. iShares International Treasury | SPDR Dow vs. iShares 1 3 Year | SPDR Dow vs. iShares MSCI Emerging |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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