Correlation Between SPDR Dow and Stadler Rail

Can any of the company-specific risk be diversified away by investing in both SPDR Dow and Stadler Rail 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 Dow and Stadler Rail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR Dow Jones and Stadler Rail AG, you can compare the effects of market volatilities on SPDR Dow and Stadler Rail 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 Dow with a short position of Stadler Rail. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and Stadler Rail.

Diversification Opportunities for SPDR Dow and Stadler Rail

-0.3

Correlation Coefficient

SPDR Dow  Stadler Rail

Very good diversification

The 3 months correlation between SPDR and Stadler is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and Stadler Rail AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadler Rail AG and SPDR Dow 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 Dow Jones are associated (or correlated) with Stadler Rail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadler Rail AG has no effect on the direction of SPDR Dow i.e., SPDR Dow and Stadler Rail go up and down completely randomly.

Pair Corralation between SPDR Dow and Stadler Rail

Assuming the 90 days trading horizon SPDR Dow Jones is expected to under-perform the Stadler Rail. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Dow Jones is 2.22 times less risky than Stadler Rail. The etf trades about -0.1 of its potential returns per unit of risk. The Stadler Rail AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,020  in Stadler Rail AG on September 15, 2024 and sell it today you would lose (15.00) from holding Stadler Rail AG or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SPDR Dow Jones  vs.  Stadler Rail AG

SPDR Dow Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Dow Jones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPDR Dow is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stadler Rail AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stadler Rail AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SPDR Dow and Stadler Rail

The main advantage of trading using opposite SPDR Dow and Stadler Rail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, Stadler Rail 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 Stadler Rail will offset losses from the drop in Stadler Rail's long position.

The idea behind SPDR Dow Jones and Stadler Rail AG 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.