Correlation Between FT Vest and SPDR SP
Can any of the company-specific risk be diversified away by investing in both FT Vest 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 FT Vest and SPDR SP 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 SP 1500, you can compare the effects of market volatilities on FT Vest 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 FT Vest with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and SPDR SP.
Diversification Opportunities for FT Vest and SPDR SP
Good diversification
The 3 months correlation between DHDG and SPDR is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and SPDR SP 1500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 1500 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 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 1500 has no effect on the direction of FT Vest i.e., FT Vest and SPDR SP go up and down completely randomly.
Pair Corralation between FT Vest and SPDR SP
Given the investment horizon of 90 days FT Vest is expected to generate 1.55 times less return on investment than SPDR SP. But when comparing it to its historical volatility, FT Vest Equity is 1.85 times less risky than SPDR SP. It trades about 0.18 of its potential returns per unit of risk. SPDR SP 1500 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 14,231 in SPDR SP 1500 on September 4, 2024 and sell it today you would earn a total of 5,288 from holding SPDR SP 1500 or generate 37.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 10.69% |
| Values | Daily Returns |
FT Vest Equity vs. SPDR SP 1500
Performance |
| Timeline |
| FT Vest Equity |
| SPDR SP 1500 |
FT Vest and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and SPDR SP
The main advantage of trading using opposite FT Vest and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest 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.| FT Vest vs. Vanguard Total Stock | FT Vest vs. SPDR SP 500 | FT Vest vs. Vanguard Total Bond | FT Vest vs. Vanguard Value Index |
| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. JPMorgan Fundamental Data |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |