Correlation Between SPDR Barclays and American Century
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and American Century 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 American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Short and American Century Short, you can compare the effects of market volatilities on SPDR Barclays and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and American Century.
Diversification Opportunities for SPDR Barclays and American Century
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and American is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Short and American Century Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century 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 Short are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Short has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and American Century go up and down completely randomly.
Pair Corralation between SPDR Barclays and American Century
Given the investment horizon of 90 days SPDR Barclays Short is expected to generate 0.88 times more return on investment than American Century. However, SPDR Barclays Short is 1.13 times less risky than American Century. It trades about 0.19 of its potential returns per unit of risk. American Century Short is currently generating about 0.15 per unit of risk. If you would invest 2,989 in SPDR Barclays Short on September 1, 2024 and sell it today you would earn a total of 11.00 from holding SPDR Barclays Short or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR Barclays Short vs. American Century Short
Performance |
| Timeline |
| SPDR Barclays Short |
| American Century Short |
SPDR Barclays and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and American Century
The main advantage of trading using opposite SPDR Barclays and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| SPDR Barclays vs. SPDR Barclays Intermediate | SPDR Barclays vs. Western Asset Short | SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. iShares 1 5 Year |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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