# JNK and SPY price movements question

Economics Asked by MathIsLife12 on December 19, 2020

I am looking at the graph of JNK and SPY prices close prices since 2008. From 2008 to 2011, the two prices seem to move together. However, somewhere in the beginning of 2012, the prices all of a sudden began to move in opposite directions. Does anyone know the reason for this? A picture is provided below.

When JNK appeared on the market on Dec 04 2007 it started at approximately the same price level at SPY (143 vs 146). It is however not true that after this they moved together. I downloaded the price data and calculated the correlation of the price differences* for the first 180 days. The correlation coefficient was -0.0526.

They seem to move together because

1. both fell during the financial crisis
2. in Dec 2007 the prices were roughly the same
3. later the two prices drifted apart, this increases the scale and makes it hard to discern visually what happened in the early days.

So in essence this is an optical illusion.

*I did not run statistical tests for integration, but this seems very likely. Calculation was done in R using cor(diff(SPY$Close[1:180]),diff(JNK$Close[1:180])).

Answered by Giskard on December 19, 2020

## Related Questions

### How many cars are made in China by Chinese brands?

0  Asked on September 2, 2021

### What quasi-experimental/econometric technique can I use to measure the impact of a policy using longtitudinal tax data?

0  Asked on September 2, 2021

### Does the Efficient Market Hypothesis explain why Cheaspeake Energy skyrocketed from $25.95 to$77.5 before tumbling to $21 over 3 days? 0 Asked on September 2, 2021 ### Blackwell order of information structures 1 Asked on September 2, 2021 ### How to interpret this regression coefficient? 1 Asked on September 2, 2021 ### Deflate level and flow variables using PPI and CPI 1 Asked on September 2, 2021 ### Doubt about Mixed Strategy Nash Equilibrium 4 Asked on September 2, 2021 by harshit-joshi ### What does Mohamed El-Erian mean by “recovery value of assets”? 1 Asked on September 2, 2021 ### how to explain the term “Compensated law of demand” in a plain way? 1 Asked on September 2, 2021 by rui-lee ### Does the stock market usually overshoot both ways? 0 Asked on September 2, 2021 ### Modelling the effect of crisis on unemployment 0 Asked on September 2, 2021 by r-user ### Dornbusch model for exchange rate undershooting 1 Asked on September 2, 2021 by user51966 ### GDP Identity:Why does$text{C+S+T = C+I+G+(X-M)}$? 1 Asked on September 2, 2021 ### Check if a utility function represents a monotone preference 1 Asked on September 2, 2021 by frodo-baggins ### How to calculate PPP$ from LCUs?

1  Asked on September 1, 2021 by hans-peter-stricker

### Some basic questions on infromation asymmetry

1  Asked on September 1, 2021

### Solving a HJB with a probability to transit to a new state

2  Asked on September 1, 2021 by mr-fafa

### How can I obtain monthly unemployment by ethnicity by state for the US?

0  Asked on September 1, 2021 by theeconomist

### Cashflow Risk vs Discount Risk

0  Asked on September 1, 2021

### Are no arbitrage models and equilibrium models equivalent?

1  Asked on September 1, 2021