Correlation Between SPDR Nuveen and VanEck High

Can any of the company-specific risk be diversified away by investing in both SPDR Nuveen and VanEck High 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 VanEck High 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 VanEck High Yield, you can compare the effects of market volatilities on SPDR Nuveen and VanEck High 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 VanEck High. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Nuveen and VanEck High.

Diversification Opportunities for SPDR Nuveen and VanEck High

0.83

Correlation Coefficient

SPDR Nuveen  VanEck High

Very poor diversification

The 3 months correlation between SPDR and VanEck is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Nuveen Bloomberg and VanEck High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck High Yield 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 VanEck High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck High Yield has no effect on the direction of SPDR Nuveen i.e., SPDR Nuveen and VanEck High go up and down completely randomly.

Pair Corralation between SPDR Nuveen and VanEck High

Considering the 90-day investment horizon SPDR Nuveen is expected to generate 3.25 times less return on investment than VanEck High. But when comparing it to its historical volatility, SPDR Nuveen Bloomberg is 2.66 times less risky than VanEck High. It trades about 0.12 of its potential returns per unit of risk. VanEck High Yield is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,202  in VanEck High Yield on August 30, 2024 and sell it today you would earn a total of  71.00  from holding VanEck High Yield or generate 1.36% return on investment over 90 days.

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

SPDR Nuveen Bloomberg  vs.  VanEck High Yield

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.

VanEck High Yield

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck High Yield are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck High is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR Nuveen and VanEck High

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

The idea behind SPDR Nuveen Bloomberg and VanEck High Yield 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.