Correlation Between FT Vest and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both FT Vest and SPDR Portfolio 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 FT Vest and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest Equity and SPDR Portfolio SP, you can compare the effects of market volatilities on FT Vest and SPDR Portfolio 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 FT Vest with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and SPDR Portfolio.
Diversification Opportunities for FT Vest and SPDR Portfolio
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between DHDG and SPDR is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP and FT Vest 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 FT Vest Equity are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of FT Vest i.e., FT Vest and SPDR Portfolio go up and down completely randomly.
Pair Corralation between FT Vest and SPDR Portfolio
Given the investment horizon of 90 days FT Vest is expected to generate 2.07 times less return on investment than SPDR Portfolio. But when comparing it to its historical volatility, FT Vest Equity is 2.64 times less risky than SPDR Portfolio. It trades about 0.17 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,356 in SPDR Portfolio SP on August 24, 2024 and sell it today you would earn a total of 274.00 from holding SPDR Portfolio SP or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT Vest Equity vs. SPDR Portfolio SP
Performance |
| Timeline |
| FT Vest Equity |
| SPDR Portfolio SP |
FT Vest and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and SPDR Portfolio
The main advantage of trading using opposite FT Vest and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded | FT Vest vs. EA Series Trust |
| SPDR Portfolio vs. FT Vest Equity | SPDR Portfolio vs. Northern Lights | SPDR Portfolio vs. Dimensional International High | SPDR Portfolio vs. First Trust Exchange Traded |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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