Correlation Between SPDR Barclays and Western Asset
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Intermediate and Western Asset Short, you can compare the effects of market volatilities on SPDR Barclays and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Western Asset.
Diversification Opportunities for SPDR Barclays and Western Asset
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and Western is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and Western Asset Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short 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 Intermediate are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Short has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Western Asset go up and down completely randomly.
Pair Corralation between SPDR Barclays and Western Asset
Given the investment horizon of 90 days SPDR Barclays Intermediate is expected to generate 1.75 times more return on investment than Western Asset. However, SPDR Barclays is 1.75 times more volatile than Western Asset Short. It trades about 0.16 of its potential returns per unit of risk. Western Asset Short is currently generating about 0.23 per unit of risk. If you would invest 3,276 in SPDR Barclays Intermediate on November 3, 2024 and sell it today you would earn a total of 23.00 from holding SPDR Barclays Intermediate or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SPDR Barclays Intermediate vs. Western Asset Short
Performance |
| Timeline |
| SPDR Barclays Interm |
| Western Asset Short |
SPDR Barclays and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Western Asset
The main advantage of trading using opposite SPDR Barclays and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. SPDR Bloomberg Emerging | SPDR Barclays vs. SPDR Barclays Long | SPDR Barclays vs. SPDR Barclays Short |
| Western Asset vs. Columbia Diversified Fixed | Western Asset vs. Doubleline Etf Trust | Western Asset vs. Virtus Newfleet ABSMBS | Western Asset vs. Vident Core Bond |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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