Correlation Between SPDR Nuveen and Capital Group

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

By analyzing existing cross correlation between SPDR Nuveen Bloomberg and Capital Group Fixed, you can compare the effects of market volatilities on SPDR Nuveen and Capital Group 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 Nuveen with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Nuveen and Capital Group.

Diversification Opportunities for SPDR Nuveen and Capital Group

0.53

Correlation Coefficient

SPDR Nuveen  Capital Group

Very weak diversification

The 3 months correlation between SPDR and Capital is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Nuveen Bloomberg and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed and SPDR Nuveen 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 Nuveen Bloomberg are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Fixed has no effect on the direction of SPDR Nuveen i.e., SPDR Nuveen and Capital Group go up and down completely randomly.

Pair Corralation between SPDR Nuveen and Capital Group

Considering the 90-day investment horizon SPDR Nuveen is expected to generate 3.06 times less return on investment than Capital Group. But when comparing it to its historical volatility, SPDR Nuveen Bloomberg is 1.07 times less risky than Capital Group. It trades about 0.03 of its potential returns per unit of risk. Capital Group Fixed is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,603  in Capital Group Fixed on August 30, 2024 and sell it today you would earn a total of  17.00  from holding Capital Group Fixed or generate 0.65% return on investment over 90 days.

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

SPDR Nuveen Bloomberg  vs.  Capital Group Fixed

SPDR Nuveen Bloomberg

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Nuveen Bloomberg are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, SPDR Nuveen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Capital Group Fixed

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Capital Group Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Capital Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR Nuveen and Capital Group

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

The idea behind SPDR Nuveen Bloomberg and Capital Group Fixed 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.