Correlation Between VanEck FTSE and SPDR SPASX
Can any of the company-specific risk be diversified away by investing in both VanEck FTSE and SPDR SPASX 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 VanEck FTSE and SPDR SPASX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck FTSE China and SPDR SPASX 200, you can compare the effects of market volatilities on VanEck FTSE and SPDR SPASX 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 VanEck FTSE with a short position of SPDR SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck FTSE and SPDR SPASX.
Diversification Opportunities for VanEck FTSE and SPDR SPASX
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and SPDR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding VanEck FTSE China and SPDR SPASX 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SPASX 200 and VanEck FTSE 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 VanEck FTSE China are associated (or correlated) with SPDR SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SPASX 200 has no effect on the direction of VanEck FTSE i.e., VanEck FTSE and SPDR SPASX go up and down completely randomly.
Pair Corralation between VanEck FTSE and SPDR SPASX
Assuming the 90 days trading horizon VanEck FTSE China is expected to generate 1.34 times more return on investment than SPDR SPASX. However, VanEck FTSE is 1.34 times more volatile than SPDR SPASX 200. It trades about 0.06 of its potential returns per unit of risk. SPDR SPASX 200 is currently generating about -0.04 per unit of risk. If you would invest 4,545 in VanEck FTSE China on August 25, 2024 and sell it today you would earn a total of 1,010 from holding VanEck FTSE China or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck FTSE China vs. SPDR SPASX 200
Performance |
| Timeline |
| VanEck FTSE China |
| SPDR SPASX 200 |
VanEck FTSE and SPDR SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck FTSE and SPDR SPASX
The main advantage of trading using opposite VanEck FTSE and SPDR SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck FTSE position performs unexpectedly, SPDR SPASX 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 SPASX will offset losses from the drop in SPDR SPASX's long position.| VanEck FTSE vs. Betashares Asia Technology | VanEck FTSE vs. CD Private Equity | VanEck FTSE vs. BetaShares Australia 200 | VanEck FTSE vs. Australian High Interest |
| SPDR SPASX vs. Vanguard Total Market | SPDR SPASX vs. SPDR SP 500 | SPDR SPASX vs. iShares Core SP | SPDR SPASX vs. iShares Core SP |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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