Correlation Between SPDR Portfolio and SPDR Bloomberg

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

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

Diversification Opportunities for SPDR Portfolio and SPDR Bloomberg

0.97

Correlation Coefficient

SPDR Portfolio  SPDR Bloomberg

Almost no diversification

The 3 months correlation between SPDR and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Corporate and SPDR Bloomberg Barclays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Barclays and SPDR Portfolio 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 Portfolio Corporate are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Barclays has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between SPDR Portfolio and SPDR Bloomberg

Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.3 times less return on investment than SPDR Bloomberg. But when comparing it to its historical volatility, SPDR Portfolio Corporate is 1.19 times less risky than SPDR Bloomberg. It trades about 0.09 of its potential returns per unit of risk. SPDR Bloomberg Barclays is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,166  in SPDR Bloomberg Barclays on September 14, 2024 and sell it today you would earn a total of  263.00  from holding SPDR Bloomberg Barclays or generate 12.14% return on investment over 90 days.

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

SPDR Portfolio Corporate  vs.  SPDR Bloomberg Barclays

SPDR Portfolio Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Portfolio Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, SPDR Portfolio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SPDR Bloomberg Barclays

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Bloomberg Barclays has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR Portfolio and SPDR Bloomberg

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

The idea behind SPDR Portfolio Corporate and SPDR Bloomberg Barclays 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.