Correlation Between Industrial Select and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both Industrial Select and SPDR Barclays 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 Industrial Select and SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Select Sector and SPDR Barclays Intermediate, you can compare the effects of market volatilities on Industrial Select and SPDR Barclays 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 Industrial Select with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Select and SPDR Barclays.
Diversification Opportunities for Industrial Select and SPDR Barclays
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Industrial and SPDR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Select Sector and SPDR Barclays Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Interm and Industrial Select 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 Industrial Select Sector are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Interm has no effect on the direction of Industrial Select i.e., Industrial Select and SPDR Barclays go up and down completely randomly.
Pair Corralation between Industrial Select and SPDR Barclays
Considering the 90-day investment horizon Industrial Select Sector is expected to generate 2.87 times more return on investment than SPDR Barclays. However, Industrial Select is 2.87 times more volatile than SPDR Barclays Intermediate. It trades about 0.0 of its potential returns per unit of risk. SPDR Barclays Intermediate is currently generating about -0.17 per unit of risk. If you would invest 12,188 in Industrial Select Sector on January 18, 2024 and sell it today you would lose (14.00) from holding Industrial Select Sector or give up 0.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Industrial Select Sector vs. SPDR Barclays Intermediate
Performance |
Timeline |
Industrial Select Sector |
SPDR Barclays Interm |
Industrial Select and SPDR Barclays Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Industrial Select and SPDR Barclays
The main advantage of trading using opposite Industrial Select and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Select position performs unexpectedly, SPDR Barclays 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 Barclays will offset losses from the drop in SPDR Barclays' long position.Industrial Select vs. Materials Select Sector | Industrial Select vs. Consumer Discretionary Select | Industrial Select vs. Consumer Staples Select | Industrial Select vs. Health Care Select |
SPDR Barclays vs. Fidelity Limited Term | SPDR Barclays vs. Fidelity Total Bond | SPDR Barclays vs. Fidelity High Yield | SPDR Barclays vs. Fidelity Low Volatility |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Fundamental Analysis View fundamental data based on most recent published financial statements |