Correlation Between Shinhan WTI and KODEX SP500TR
Can any of the company-specific risk be diversified away by investing in both Shinhan WTI and KODEX SP500TR 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 Shinhan WTI and KODEX SP500TR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan WTI Futures and KODEX SP500TR, you can compare the effects of market volatilities on Shinhan WTI and KODEX SP500TR 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 Shinhan WTI with a short position of KODEX SP500TR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan WTI and KODEX SP500TR.
Diversification Opportunities for Shinhan WTI and KODEX SP500TR
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and KODEX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan WTI Futures and KODEX SP500TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX SP500TR and Shinhan WTI 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 Shinhan WTI Futures are associated (or correlated) with KODEX SP500TR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX SP500TR has no effect on the direction of Shinhan WTI i.e., Shinhan WTI and KODEX SP500TR go up and down completely randomly.
Pair Corralation between Shinhan WTI and KODEX SP500TR
Assuming the 90 days trading horizon Shinhan WTI is expected to generate 2.58 times less return on investment than KODEX SP500TR. In addition to that, Shinhan WTI is 2.44 times more volatile than KODEX SP500TR. It trades about 0.02 of its total potential returns per unit of risk. KODEX SP500TR is currently generating about 0.15 per unit of volatility. If you would invest 1,172,000 in KODEX SP500TR on November 5, 2024 and sell it today you would earn a total of 850,500 from holding KODEX SP500TR or generate 72.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.96% |
| Values | Daily Returns |
Shinhan WTI Futures vs. KODEX SP500TR
Performance |
| Timeline |
| Shinhan WTI Futures |
| KODEX SP500TR |
Shinhan WTI and KODEX SP500TR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan WTI and KODEX SP500TR
The main advantage of trading using opposite Shinhan WTI and KODEX SP500TR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan WTI position performs unexpectedly, KODEX SP500TR 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 KODEX SP500TR will offset losses from the drop in KODEX SP500TR's long position.| Shinhan WTI vs. Sung Bo Chemicals | Shinhan WTI vs. Daejung Chemicals Metals | Shinhan WTI vs. Infinitt Healthcare Co | Shinhan WTI vs. LG Household Healthcare |
| KODEX SP500TR vs. KODEX 200LONGKOSDAQ150SHORT Futures | KODEX SP500TR vs. KODEX K Renewable Energy | KODEX SP500TR vs. KODEX Metaverse Nasdaq | KODEX SP500TR vs. KODEX KOSPI LargeCap |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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