Correlation Between SPDR Index and SPDR Series
Can any of the company-specific risk be diversified away by investing in both SPDR Index and SPDR Series 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 Index and SPDR Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Index Shares and SPDR Series Trust, you can compare the effects of market volatilities on SPDR Index and SPDR Series 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 Index with a short position of SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Index and SPDR Series.
Diversification Opportunities for SPDR Index and SPDR Series
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and SPDR is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Index Shares and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust and SPDR Index 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 Index Shares are associated (or correlated) with SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of SPDR Index i.e., SPDR Index and SPDR Series go up and down completely randomly.
Pair Corralation between SPDR Index and SPDR Series
Assuming the 90 days trading horizon SPDR Index is expected to generate 1.39 times less return on investment than SPDR Series. In addition to that, SPDR Index is 1.5 times more volatile than SPDR Series Trust. It trades about 0.04 of its total potential returns per unit of risk. SPDR Series Trust is currently generating about 0.09 per unit of volatility. If you would invest 256,547 in SPDR Series Trust on September 1, 2024 and sell it today you would earn a total of 44,553 from holding SPDR Series Trust or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Index Shares vs. SPDR Series Trust
Performance |
| Timeline |
| SPDR Index Shares |
| SPDR Series Trust |
SPDR Index and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Index and SPDR Series
The main advantage of trading using opposite SPDR Index and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Index position performs unexpectedly, SPDR Series 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 Series will offset losses from the drop in SPDR Series' long position.| SPDR Index vs. SPDR Dow Jones | SPDR Index vs. SPDR Gold Trust | SPDR Index vs. SPDR SP 500 | SPDR Index vs. SPDR Series Trust |
| SPDR Series vs. Promotora y Operadora | SPDR Series vs. UnitedHealth Group Incorporated | SPDR Series vs. Qulitas Controladora SAB | SPDR Series vs. Hoteles City Express |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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