Correlation Between SPDR Series and WisdomTree Floating
Can any of the company-specific risk be diversified away by investing in both SPDR Series and WisdomTree Floating 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 Series and WisdomTree Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Series Trust and WisdomTree Floating Rate, you can compare the effects of market volatilities on SPDR Series and WisdomTree Floating 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 Series with a short position of WisdomTree Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Series and WisdomTree Floating.
Diversification Opportunities for SPDR Series and WisdomTree Floating
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and WisdomTree is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Series Trust and WisdomTree Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Floating Rate and SPDR Series 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 Series Trust are associated (or correlated) with WisdomTree Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Floating Rate has no effect on the direction of SPDR Series i.e., SPDR Series and WisdomTree Floating go up and down completely randomly.
Pair Corralation between SPDR Series and WisdomTree Floating
Given the investment horizon of 90 days SPDR Series is expected to generate 1.08 times less return on investment than WisdomTree Floating. But when comparing it to its historical volatility, SPDR Series Trust is 1.17 times less risky than WisdomTree Floating. It trades about 1.1 of its potential returns per unit of risk. WisdomTree Floating Rate is currently generating about 1.02 of returns per unit of risk over similar time horizon. If you would invest 4,931 in WisdomTree Floating Rate on November 2, 2024 and sell it today you would earn a total of 103.00 from holding WisdomTree Floating Rate or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Series Trust vs. WisdomTree Floating Rate
Performance |
| Timeline |
| SPDR Series Trust |
| WisdomTree Floating Rate |
SPDR Series and WisdomTree Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Series and WisdomTree Floating
The main advantage of trading using opposite SPDR Series and WisdomTree Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Series position performs unexpectedly, WisdomTree Floating 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 WisdomTree Floating will offset losses from the drop in WisdomTree Floating's long position.| SPDR Series vs. WisdomTree Floating Rate | SPDR Series vs. iShares 0 3 Month | SPDR Series vs. SPDR Bloomberg 1 3 | SPDR Series vs. iShares Treasury Floating |
| WisdomTree Floating vs. iShares Treasury Floating | WisdomTree Floating vs. SPDR Bloomberg Investment | WisdomTree Floating vs. iShares 0 3 Month | WisdomTree Floating vs. SPDR Barclays Short |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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