Correlation Between SMI 3Fourteen and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SMI 3Fourteen 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 SMI 3Fourteen and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMI 3Fourteen Full Cycle and SPDR SP 500, you can compare the effects of market volatilities on SMI 3Fourteen 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 SMI 3Fourteen with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMI 3Fourteen and SPDR SP.
Diversification Opportunities for SMI 3Fourteen and SPDR SP
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SMI and SPDR is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SMI 3Fourteen Full Cycle and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and SMI 3Fourteen 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 SMI 3Fourteen Full Cycle 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 500 has no effect on the direction of SMI 3Fourteen i.e., SMI 3Fourteen and SPDR SP go up and down completely randomly.
Pair Corralation between SMI 3Fourteen and SPDR SP
Given the investment horizon of 90 days SMI 3Fourteen Full Cycle is expected to under-perform the SPDR SP. In addition to that, SMI 3Fourteen is 1.33 times more volatile than SPDR SP 500. It trades about -0.08 of its total potential returns per unit of risk. SPDR SP 500 is currently generating about 0.12 per unit of volatility. If you would invest 59,690 in SPDR SP 500 on September 13, 2024 and sell it today you would earn a total of 747.00 from holding SPDR SP 500 or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMI 3Fourteen Full Cycle vs. SPDR SP 500
Performance |
| Timeline |
| SMI 3Fourteen Full |
| SPDR SP 500 |
SMI 3Fourteen and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMI 3Fourteen and SPDR SP
The main advantage of trading using opposite SMI 3Fourteen and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMI 3Fourteen 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.| SMI 3Fourteen vs. Vanguard SP 500 | SMI 3Fourteen vs. Vanguard Real Estate | SMI 3Fourteen vs. Vanguard Total Bond | SMI 3Fourteen vs. Vanguard High Dividend |
| SPDR SP vs. Vanguard SP 500 | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class | SPDR SP vs. Northern Lights |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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