Correlation Between SPDR Barclays and SPDR Portfolio

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

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

Diversification Opportunities for SPDR Barclays and SPDR Portfolio

0.76

Correlation Coefficient

SPDR Barclays  SPDR Portfolio

Poor diversification

The 3 months correlation between SPDR and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and SPDR Portfolio Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Inter and SPDR Barclays 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 Barclays Intermediate are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Inter has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and SPDR Portfolio go up and down completely randomly.

Pair Corralation between SPDR Barclays and SPDR Portfolio

Given the investment horizon of 90 days SPDR Barclays Intermediate is expected to generate 0.74 times more return on investment than SPDR Portfolio. However, SPDR Barclays Intermediate is 1.36 times less risky than SPDR Portfolio. It trades about 0.19 of its potential returns per unit of risk. SPDR Portfolio Intermediate is currently generating about 0.07 per unit of risk. If you would invest  3,273  in SPDR Barclays Intermediate on April 24, 2025 and sell it today you would earn a total of  74.00  from holding SPDR Barclays Intermediate or generate 2.26% return on investment over 90 days.

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

SPDR Barclays Intermediate  vs.  SPDR Portfolio Intermediate

SPDR Barclays Interm

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Intermediate are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPDR Portfolio Inter

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio Intermediate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, SPDR Portfolio is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SPDR Barclays and SPDR Portfolio

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

The idea behind SPDR Barclays Intermediate and SPDR Portfolio Intermediate 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.