Correlation Between SPDR Barclays and VictoryShares USAA
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and VictoryShares USAA 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 VictoryShares USAA 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 VictoryShares USAA Core, you can compare the effects of market volatilities on SPDR Barclays and VictoryShares USAA 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 VictoryShares USAA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and VictoryShares USAA.
Diversification Opportunities for SPDR Barclays and VictoryShares USAA
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and VictoryShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Short and VictoryShares USAA Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares USAA Core 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 VictoryShares USAA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares USAA Core has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and VictoryShares USAA go up and down completely randomly.
Pair Corralation between SPDR Barclays and VictoryShares USAA
Given the investment horizon of 90 days SPDR Barclays is expected to generate 1.36 times less return on investment than VictoryShares USAA. But when comparing it to its historical volatility, SPDR Barclays Short is 1.16 times less risky than VictoryShares USAA. It trades about 0.11 of its potential returns per unit of risk. VictoryShares USAA Core is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,021 in VictoryShares USAA Core on August 29, 2024 and sell it today you would earn a total of 16.00 from holding VictoryShares USAA Core or generate 0.32% 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. VictoryShares USAA Core
Performance |
| Timeline |
| SPDR Barclays Short |
| VictoryShares USAA Core |
SPDR Barclays and VictoryShares USAA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and VictoryShares USAA
The main advantage of trading using opposite SPDR Barclays and VictoryShares USAA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, VictoryShares USAA 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 VictoryShares USAA will offset losses from the drop in VictoryShares USAA'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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