Correlation Between SPDR Bloomberg and Invesco BulletShares

Can any of the company-specific risk be diversified away by investing in both SPDR Bloomberg and Invesco BulletShares 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 Invesco BulletShares 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 Invesco BulletShares 2027, you can compare the effects of market volatilities on SPDR Bloomberg and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and Invesco BulletShares.

Diversification Opportunities for SPDR Bloomberg and Invesco BulletShares

0.99

Correlation Coefficient

SPDR Bloomberg  Invesco BulletShares

No risk reduction

The 3 months correlation between SPDR and Invesco is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Short and Invesco BulletShares 2027 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2027 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2027 has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and Invesco BulletShares go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and Invesco BulletShares

Given the investment horizon of 90 days SPDR Bloomberg Short is expected to generate 1.09 times more return on investment than Invesco BulletShares. However, SPDR Bloomberg is 1.09 times more volatile than Invesco BulletShares 2027. It trades about 0.22 of its potential returns per unit of risk. Invesco BulletShares 2027 is currently generating about 0.21 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

SPDR Bloomberg Short  vs.  Invesco BulletShares 2027

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.

Invesco BulletShares 2027

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco BulletShares 2027 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking indicators, Invesco BulletShares is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPDR Bloomberg and Invesco BulletShares

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

The idea behind SPDR Bloomberg Short and Invesco BulletShares 2027 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.