Correlation Between ETRACS Quarterly and SPDR FTSE

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

By analyzing existing cross correlation between ETRACS Quarterly Pay and SPDR FTSE International, you can compare the effects of market volatilities on ETRACS Quarterly and SPDR FTSE 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 ETRACS Quarterly with a short position of SPDR FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Quarterly and SPDR FTSE.

Diversification Opportunities for ETRACS Quarterly and SPDR FTSE

-0.58

Correlation Coefficient

ETRACS Quarterly  SPDR FTSE

Excellent diversification

The 3 months correlation between ETRACS and SPDR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Quarterly Pay and SPDR FTSE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FTSE International and ETRACS Quarterly 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 ETRACS Quarterly Pay are associated (or correlated) with SPDR FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FTSE International has no effect on the direction of ETRACS Quarterly i.e., ETRACS Quarterly and SPDR FTSE go up and down completely randomly.

Pair Corralation between ETRACS Quarterly and SPDR FTSE

Given the investment horizon of 90 days ETRACS Quarterly Pay is expected to generate 3.1 times more return on investment than SPDR FTSE. However, ETRACS Quarterly is 3.1 times more volatile than SPDR FTSE International. It trades about 0.07 of its potential returns per unit of risk. SPDR FTSE International is currently generating about -0.2 per unit of risk. If you would invest  5,673  in ETRACS Quarterly Pay on September 18, 2024 and sell it today you would earn a total of  352.00  from holding ETRACS Quarterly Pay or generate 6.2% return on investment over 90 days.

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

ETRACS Quarterly Pay  vs.  SPDR FTSE International

ETRACS Quarterly Pay

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Quarterly Pay are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, ETRACS Quarterly may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPDR FTSE International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR FTSE International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Etf's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with ETRACS Quarterly and SPDR FTSE

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

The idea behind ETRACS Quarterly Pay and SPDR FTSE International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.