Correlation Between American Funds and SPDR SP
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and SPDR SP Global, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and SPDR SP.
Diversification Opportunities for American Funds and SPDR SP
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and SPDR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global and American Funds 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 American Funds Fundamental 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 Global has no effect on the direction of American Funds i.e., American Funds and SPDR SP go up and down completely randomly.
Pair Corralation between American Funds and SPDR SP
Assuming the 90 days horizon American Funds Fundamental is expected to generate 1.08 times more return on investment than SPDR SP. However, American Funds is 1.08 times more volatile than SPDR SP Global. It trades about 0.2 of its potential returns per unit of risk. SPDR SP Global is currently generating about 0.16 per unit of risk. If you would invest 8,194 in American Funds Fundamental on October 24, 2024 and sell it today you would earn a total of 259.00 from holding American Funds Fundamental or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
American Funds Fundamental vs. SPDR SP Global
Performance |
| Timeline |
| American Funds Funda |
| SPDR SP Global |
American Funds and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and SPDR SP
The main advantage of trading using opposite American Funds and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Virtus High Yield | American Funds vs. Ab High Income | American Funds vs. Multi Manager High Yield | American Funds vs. Ab High Income |
| SPDR SP vs. SPDR MSCI World | SPDR SP vs. SPDR SP Dividend | SPDR SP vs. SPDR SP 500 | SPDR SP vs. SPDR BB SB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |