Correlation Between SPDR Barclays and Invesco BulletShares

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Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Invesco BulletShares 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 Invesco BulletShares 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 Invesco BulletShares 2028, you can compare the effects of market volatilities on SPDR Barclays and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Invesco BulletShares.

Diversification Opportunities for SPDR Barclays and Invesco BulletShares

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SPDR and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and Invesco BulletShares 2028 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2028 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2028 has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Invesco BulletShares go up and down completely randomly.

Pair Corralation between SPDR Barclays and Invesco BulletShares

Given the investment horizon of 90 days SPDR Barclays Intermediate is expected to generate 1.01 times more return on investment than Invesco BulletShares. However, SPDR Barclays is 1.01 times more volatile than Invesco BulletShares 2028. It trades about 0.25 of its potential returns per unit of risk. Invesco BulletShares 2028 is currently generating about 0.24 per unit of risk. If you would invest  3,234  in SPDR Barclays Intermediate on December 29, 2023 and sell it today you would earn a total of  35.00  from holding SPDR Barclays Intermediate or generate 1.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SPDR Barclays Intermediate  vs.  Invesco BulletShares 2028

 Performance 
       Timeline  
SPDR Barclays Interm 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Intermediate are ranked lower than 1 (%) 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.
Invesco BulletShares 2028 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Invesco BulletShares 2028 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Invesco BulletShares is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR Barclays and Invesco BulletShares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Barclays and Invesco BulletShares

The main advantage of trading using opposite SPDR Barclays and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Invesco BulletShares 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 Invesco BulletShares will offset losses from the drop in Invesco BulletShares' long position.
The idea behind SPDR Barclays Intermediate and Invesco BulletShares 2028 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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