Correlation Between SPDR SP and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Barclays 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 SP and SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Materials and SPDR Barclays 10, you can compare the effects of market volatilities on SPDR SP and SPDR Barclays 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 SP with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Barclays.
Diversification Opportunities for SPDR SP and SPDR Barclays
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SPDR and SPDR is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Materials and SPDR Barclays 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays 10 and SPDR SP 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 SP Materials are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays 10 has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Barclays go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Barclays
Assuming the 90 days trading horizon SPDR SP Materials is expected to generate 0.93 times more return on investment than SPDR Barclays. However, SPDR SP Materials is 1.07 times less risky than SPDR Barclays. It trades about 0.07 of its potential returns per unit of risk. SPDR Barclays 10 is currently generating about 0.02 per unit of risk. If you would invest 3,507 in SPDR SP Materials on September 1, 2024 and sell it today you would earn a total of 852.00 from holding SPDR SP Materials or generate 24.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Materials vs. SPDR Barclays 10
Performance |
| Timeline |
| SPDR SP Materials |
| SPDR Barclays 10 |
SPDR SP and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Barclays
The main advantage of trading using opposite SPDR SP and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' long position.| SPDR SP vs. UBS Fund Solutions | SPDR SP vs. Xtrackers II | SPDR SP vs. Xtrackers Nikkei 225 | SPDR SP vs. iShares VII PLC |
| SPDR Barclays vs. SPDR ICE BofA | SPDR Barclays vs. SPDR SP Utilities | SPDR Barclays vs. SPDR ICE BofA | SPDR Barclays vs. SPDR Barclays 3 5 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |