Correlation Between SPDR Global and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SPDR Global 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 SPDR Global and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Global Dow and SPDR SP Emerging, you can compare the effects of market volatilities on SPDR Global 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 SPDR Global with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Global and SPDR SP.
Diversification Opportunities for SPDR Global and SPDR SP
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SPDR and SPDR is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Global Dow and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging and SPDR Global 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 Global Dow 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 Emerging has no effect on the direction of SPDR Global i.e., SPDR Global and SPDR SP go up and down completely randomly.
Pair Corralation between SPDR Global and SPDR SP
Considering the 90-day investment horizon SPDR Global Dow is expected to generate 0.69 times more return on investment than SPDR SP. However, SPDR Global Dow is 1.45 times less risky than SPDR SP. It trades about 0.14 of its potential returns per unit of risk. SPDR SP Emerging is currently generating about 0.07 per unit of risk. If you would invest 12,249 in SPDR Global Dow on November 4, 2024 and sell it today you would earn a total of 1,626 from holding SPDR Global Dow or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Global Dow vs. SPDR SP Emerging
Performance |
| Timeline |
| SPDR Global Dow |
| SPDR SP Emerging |
SPDR Global and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Global and SPDR SP
The main advantage of trading using opposite SPDR Global and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Global 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.| SPDR Global vs. iShares Global 100 | SPDR Global vs. iShares MSCI Belgium | SPDR Global vs. iShares MSCI Netherlands | SPDR Global vs. iShares Dow Jones |
| SPDR SP vs. SPDR SP International | SPDR SP vs. WisdomTree Emerging Markets | SPDR SP vs. SPDR SP Emerging | SPDR SP vs. SPDR SP Emerging |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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