Correlation Between SPDR SP and Columbia Emerging
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Columbia Emerging 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 SP and Columbia Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Emerging and Columbia Emerging Markets, you can compare the effects of market volatilities on SPDR SP and Columbia Emerging 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 SP with a short position of Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Columbia Emerging.
Diversification Opportunities for SPDR SP and Columbia Emerging
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Columbia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Emerging and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets and SPDR SP 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 SP Emerging are associated (or correlated) with Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of SPDR SP i.e., SPDR SP and Columbia Emerging go up and down completely randomly.
Pair Corralation between SPDR SP and Columbia Emerging
Given the investment horizon of 90 days SPDR SP Emerging is expected to generate 0.72 times more return on investment than Columbia Emerging. However, SPDR SP Emerging is 1.39 times less risky than Columbia Emerging. It trades about 0.11 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about 0.06 per unit of risk. If you would invest 3,534 in SPDR SP Emerging on September 13, 2024 and sell it today you would earn a total of 42.50 from holding SPDR SP Emerging or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Emerging vs. Columbia Emerging Markets
Performance |
| Timeline |
| SPDR SP Emerging |
| Columbia Emerging Markets |
SPDR SP and Columbia Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Columbia Emerging
The main advantage of trading using opposite SPDR SP and Columbia Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Columbia Emerging 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 Columbia Emerging will offset losses from the drop in Columbia Emerging's long position.| SPDR SP vs. SPDR SP International | SPDR SP vs. iShares Emerging Markets | SPDR SP vs. First Trust Dow | SPDR SP vs. SPDR SP Global |
| Columbia Emerging vs. SPDR SP Emerging | Columbia Emerging vs. WisdomTree Emerging Markets | Columbia Emerging vs. WisdomTree Emerging Markets | Columbia Emerging 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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