Correlation Between SPDR SPASX and Ridley
Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and Ridley 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 SPASX and Ridley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SPASX 200 and Ridley, you can compare the effects of market volatilities on SPDR SPASX and Ridley 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 SPASX with a short position of Ridley. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and Ridley.
Diversification Opportunities for SPDR SPASX and Ridley
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Ridley is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and Ridley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridley and SPDR SPASX 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 SPASX 200 are associated (or correlated) with Ridley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridley has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and Ridley go up and down completely randomly.
Pair Corralation between SPDR SPASX and Ridley
Assuming the 90 days trading horizon SPDR SPASX 200 is expected to generate 0.4 times more return on investment than Ridley. However, SPDR SPASX 200 is 2.52 times less risky than Ridley. It trades about 0.08 of its potential returns per unit of risk. Ridley is currently generating about 0.02 per unit of risk. If you would invest 2,358 in SPDR SPASX 200 on August 29, 2024 and sell it today you would earn a total of 325.00 from holding SPDR SPASX 200 or generate 13.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SPASX 200 vs. Ridley
Performance |
| Timeline |
| SPDR SPASX 200 |
| Ridley |
SPDR SPASX and Ridley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SPASX and Ridley
The main advantage of trading using opposite SPDR SPASX and Ridley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX position performs unexpectedly, Ridley 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 Ridley will offset losses from the drop in Ridley's long position.| SPDR SPASX vs. SPDR SPASX 200 | SPDR SPASX vs. SPDR SPASX 50 | SPDR SPASX vs. SPDR MSCI World | SPDR SPASX vs. SPDR Dow Jones |
| Ridley vs. Home Consortium | Ridley vs. Clime Investment Management | Ridley vs. Argo Investments | Ridley vs. Land Homes Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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