Correlation Between SPDR Portfolio and VictoryShares USAA

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Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and VictoryShares USAA 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 Portfolio and VictoryShares USAA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Aggregate and VictoryShares USAA Core, you can compare the effects of market volatilities on SPDR Portfolio and VictoryShares USAA 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 Portfolio with a short position of VictoryShares USAA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and VictoryShares USAA.

Diversification Opportunities for SPDR Portfolio and VictoryShares USAA

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between SPDR Portfolio and VictoryShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and VictoryShares USAA Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares USAA Core and SPDR Portfolio 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 Portfolio Aggregate are associated (or correlated) with VictoryShares USAA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares USAA Core has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and VictoryShares USAA go up and down completely randomly.

Pair Corralation between SPDR Portfolio and VictoryShares USAA

Given the investment horizon of 90 days SPDR Portfolio Aggregate is expected to generate 1.02 times more return on investment than VictoryShares USAA. However, SPDR Portfolio is 1.02 times more volatile than VictoryShares USAA Core. It trades about 0.45 of its potential returns per unit of risk. VictoryShares USAA Core is currently generating about 0.39 per unit of risk. If you would invest  2,431  in SPDR Portfolio Aggregate on September 8, 2022 and sell it today you would earn a total of  148.00  from holding SPDR Portfolio Aggregate or generate 6.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SPDR Portfolio Aggregate  vs.  VictoryShares USAA Core

 Performance (%) 
       Timeline  
SPDR Portfolio Aggregate 
SPDR Portfolio Performance
0 of 100
Over the last 90 days SPDR Portfolio Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SPDR Portfolio is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SPDR Portfolio Price Channel

VictoryShares USAA Core 
VictoryShares Performance
0 of 100
Over the last 90 days VictoryShares USAA Core has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, VictoryShares USAA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

VictoryShares Price Channel

SPDR Portfolio and VictoryShares USAA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Portfolio and VictoryShares USAA

The main advantage of trading using opposite SPDR Portfolio and VictoryShares USAA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, VictoryShares USAA 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 VictoryShares USAA will offset losses from the drop in VictoryShares USAA's long position.
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SPDR Portfolio vs. Merck Company
The idea behind SPDR Portfolio Aggregate and VictoryShares USAA Core 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.
VictoryShares USAA vs. HP Inc
VictoryShares USAA vs. Fidelity MSCI Energy
VictoryShares USAA vs. Bondbloxx ETF Trust
VictoryShares USAA vs. Merck Company
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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