Correlation Between SPDR Bloomberg and VanEck Fallen

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

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

Diversification Opportunities for SPDR Bloomberg and VanEck Fallen

0.56

Correlation Coefficient

SPDR Bloomberg  VanEck Fallen

Very weak diversification

The 3 months correlation between SPDR and VanEck is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Short and VanEck Fallen Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Fallen Angel and SPDR Bloomberg 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 Bloomberg Short are associated (or correlated) with VanEck Fallen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Fallen Angel has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and VanEck Fallen go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and VanEck Fallen

Given the investment horizon of 90 days SPDR Bloomberg Short is expected to generate 0.73 times more return on investment than VanEck Fallen. However, SPDR Bloomberg Short is 1.38 times less risky than VanEck Fallen. It trades about 0.22 of its potential returns per unit of risk. VanEck Fallen Angel is currently generating about 0.11 per unit of risk. If you would invest  2,501  in SPDR Bloomberg Short on August 30, 2024 and sell it today you would earn a total of  61.00  from holding SPDR Bloomberg Short or generate 2.44% return on investment over 90 days.

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

SPDR Bloomberg Short  vs.  VanEck Fallen Angel

SPDR Bloomberg Short

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Short are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

VanEck Fallen Angel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Fallen Angel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, VanEck Fallen is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SPDR Bloomberg and VanEck Fallen

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

The idea behind SPDR Bloomberg Short and VanEck Fallen Angel 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.