Correlation Between SPDR Barclays and Touchstone ETF
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Touchstone ETF 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 Touchstone ETF 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 Touchstone ETF Trust, you can compare the effects of market volatilities on SPDR Barclays and Touchstone ETF 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 Touchstone ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Touchstone ETF.
Diversification Opportunities for SPDR Barclays and Touchstone ETF
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Touchstone is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Short and Touchstone ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone ETF Trust 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 Touchstone ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone ETF Trust has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Touchstone ETF go up and down completely randomly.
Pair Corralation between SPDR Barclays and Touchstone ETF
Given the investment horizon of 90 days SPDR Barclays is expected to generate 1.39 times less return on investment than Touchstone ETF. But when comparing it to its historical volatility, SPDR Barclays Short is 2.08 times less risky than Touchstone ETF. It trades about 0.13 of its potential returns per unit of risk. Touchstone ETF Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,574 in Touchstone ETF Trust on October 7, 2024 and sell it today you would earn a total of 24.00 from holding Touchstone ETF Trust or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Short vs. Touchstone ETF Trust
Performance |
| Timeline |
| SPDR Barclays Short |
| Touchstone ETF Trust |
SPDR Barclays and Touchstone ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Touchstone ETF
The main advantage of trading using opposite SPDR Barclays and Touchstone ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Touchstone ETF 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 Touchstone ETF will offset losses from the drop in Touchstone ETF's long position.The idea behind SPDR Barclays Short and Touchstone ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Touchstone ETF vs. Touchstone ETF Trust | Touchstone ETF vs. Touchstone Strategic Income | Touchstone ETF vs. Touchstone Dynamic International | Touchstone ETF vs. Touchstone ETF Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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