Correlation Between SPDR SP and VanEck Global

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

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

Diversification Opportunities for SPDR SP and VanEck Global

0.98

Correlation Coefficient

SPDR SP  VanEck Global

Almost no diversification

The 3 months correlation between SPDR and VanEck is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP World and VanEck Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Global Listed and SPDR SP 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 SP World are associated (or correlated) with VanEck Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Global Listed has no effect on the direction of SPDR SP i.e., SPDR SP and VanEck Global go up and down completely randomly.

Pair Corralation between SPDR SP and VanEck Global

Assuming the 90 days trading horizon SPDR SP is expected to generate 1.36 times less return on investment than VanEck Global. But when comparing it to its historical volatility, SPDR SP World is 1.58 times less risky than VanEck Global. It trades about 0.21 of its potential returns per unit of risk. VanEck Global Listed is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,372  in VanEck Global Listed on September 26, 2024 and sell it today you would earn a total of  188.00  from holding VanEck Global Listed or generate 7.93% return on investment over 90 days.

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

SPDR SP World  vs.  VanEck Global Listed

SPDR SP World

Risk-Adjusted Performance

20 of 100

Solid

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

VanEck Global Listed

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Global Listed are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and VanEck Global

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

The idea behind SPDR SP World and VanEck Global Listed 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..