Correlation Between SPDR Bloomberg and Xtrackers Short

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

Diversification Opportunities for SPDR Bloomberg and Xtrackers Short

0.99

Correlation Coefficient

SPDR Bloomberg  Xtrackers Short

No risk reduction

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

Pair Corralation between SPDR Bloomberg and Xtrackers Short

Given the investment horizon of 90 days SPDR Bloomberg is expected to generate 1.05 times less return on investment than Xtrackers Short. In addition to that, SPDR Bloomberg is 1.01 times more volatile than Xtrackers Short Duration. It trades about 0.26 of its total potential returns per unit of risk. Xtrackers Short Duration is currently generating about 0.28 per unit of volatility. If you would invest  4,411  in Xtrackers Short Duration on September 2, 2024 and sell it today you would earn a total of  136.00  from holding Xtrackers Short Duration or generate 3.08% 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.  Xtrackers Short Duration

SPDR Bloomberg Short

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Short are ranked lower than 20 (%) 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.

Xtrackers Short Duration

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Short Duration are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Xtrackers Short is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SPDR Bloomberg and Xtrackers Short

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

The idea behind SPDR Bloomberg Short and Xtrackers Short Duration 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.