Correlation Between SPDR STOXX and SPDR Blmbg

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

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

Diversification Opportunities for SPDR STOXX and SPDR Blmbg

0.0

Correlation Coefficient

SPDR STOXX  SPDR Blmbg

Pay attention - limited upside

The 3 months correlation between SPDR and SPDR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR STOXX Europe and SPDR Blmbg Barclays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Blmbg Barclays and SPDR STOXX 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 STOXX Europe are associated (or correlated) with SPDR Blmbg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Blmbg Barclays has no effect on the direction of SPDR STOXX i.e., SPDR STOXX and SPDR Blmbg go up and down completely randomly.

Pair Corralation between SPDR STOXX and SPDR Blmbg

If you would invest  4,465  in SPDR STOXX Europe on April 23, 2025 and sell it today you would earn a total of  351.00  from holding SPDR STOXX Europe or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SPDR STOXX Europe  vs.  SPDR Blmbg Barclays

SPDR STOXX Europe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR STOXX Europe are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, SPDR STOXX may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SPDR Blmbg Barclays

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Blmbg Barclays has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, SPDR Blmbg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR STOXX and SPDR Blmbg

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

The idea behind SPDR STOXX Europe and SPDR Blmbg Barclays 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.