Correlation Between SPDR Barclays and Utilities Select
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Utilities Select 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 Utilities Select 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 Utilities Select Sector, you can compare the effects of market volatilities on SPDR Barclays and Utilities Select 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 Utilities Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Utilities Select.
Diversification Opportunities for SPDR Barclays and Utilities Select
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Utilities is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and Utilities Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Select Sector 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 Utilities Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Select Sector has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Utilities Select go up and down completely randomly.
Pair Corralation between SPDR Barclays and Utilities Select
Given the investment horizon of 90 days SPDR Barclays is expected to generate 4.0 times less return on investment than Utilities Select. But when comparing it to its historical volatility, SPDR Barclays Intermediate is 4.34 times less risky than Utilities Select. It trades about 0.19 of its potential returns per unit of risk. Utilities Select Sector is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,791 in Utilities Select Sector on April 24, 2025 and sell it today you would earn a total of 714.00 from holding Utilities Select Sector or generate 9.16% 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. Utilities Select Sector
Performance |
Timeline |
SPDR Barclays Interm |
Utilities Select Sector |
SPDR Barclays and Utilities Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Barclays and Utilities Select
The main advantage of trading using opposite SPDR Barclays and Utilities Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Utilities Select 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 Utilities Select will offset losses from the drop in Utilities Select's long position.SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. SPDR Bloomberg Emerging | SPDR Barclays vs. SPDR Barclays Long | SPDR Barclays vs. SPDR Barclays Short |
Utilities Select vs. Consumer Staples Select | Utilities Select vs. Industrial Select Sector | Utilities Select vs. Materials Select Sector | Utilities Select vs. Health Care Select |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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