Correlation Between Xtrackers and SPDR SP

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

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

Diversification Opportunities for Xtrackers and SPDR SP

-0.79

Correlation Coefficient

Xtrackers  SPDR SP

Pay attention - limited upside

The 3 months correlation between Xtrackers and SPDR is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP and SPDR SP Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Materials and Xtrackers 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 Xtrackers SP are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Materials has no effect on the direction of Xtrackers i.e., Xtrackers and SPDR SP go up and down completely randomly.

Pair Corralation between Xtrackers and SPDR SP

Assuming the 90 days trading horizon Xtrackers SP is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers SP is 1.27 times less risky than SPDR SP. The etf trades about -0.34 of its potential returns per unit of risk. The SPDR SP Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,477  in SPDR SP Materials on April 22, 2025 and sell it today you would earn a total of  328.00  from holding SPDR SP Materials or generate 9.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Xtrackers SP  vs.  SPDR SP Materials

Xtrackers SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

SPDR SP Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Xtrackers and SPDR SP

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

The idea behind Xtrackers SP and SPDR SP Materials 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.