Correlation Between VanEck Global and SPDR SP

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

By analyzing existing cross correlation between VanEck Global Real and SPDR SP 500, you can compare the effects of market volatilities on VanEck Global and SPDR SP 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 VanEck Global with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Global and SPDR SP.

Diversification Opportunities for VanEck Global and SPDR SP

0.25

Correlation Coefficient

VanEck Global  SPDR SP

Modest diversification

The 3 months correlation between VanEck and SPDR is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Global Real and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and VanEck Global 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 VanEck Global Real are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of VanEck Global i.e., VanEck Global and SPDR SP go up and down completely randomly.

Pair Corralation between VanEck Global and SPDR SP

Assuming the 90 days trading horizon VanEck Global Real is expected to under-perform the SPDR SP. In addition to that, VanEck Global is 1.43 times more volatile than SPDR SP 500. It trades about -0.35 of its total potential returns per unit of risk. SPDR SP 500 is currently generating about -0.01 per unit of volatility. If you would invest  1,392  in SPDR SP 500 on September 23, 2024 and sell it today you would lose (2.00) from holding SPDR SP 500 or give up 0.14% of portfolio value over 90 days.

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

VanEck Global Real  vs.  SPDR SP 500

VanEck Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Global Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR SP 500

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Global and SPDR SP

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

The idea behind VanEck Global Real and SPDR SP 500 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.