Correlation Between SPDR SP and SPDR Global
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Global 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 SPDR Global 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 SPDR Global Dow, you can compare the effects of market volatilities on SPDR SP and SPDR Global 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 SPDR Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Global.
Diversification Opportunities for SPDR SP and SPDR Global
0.48 | Correlation Coefficient |
Very weak 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 SP Emerging and SPDR Global Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Global Dow 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 SPDR Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Global Dow has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Global go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Global
Considering the 90-day investment horizon SPDR SP Emerging is expected to under-perform the SPDR Global. In addition to that, SPDR SP is 1.45 times more volatile than SPDR Global Dow. It trades about -0.06 of its total potential returns per unit of risk. SPDR Global Dow is currently generating about 0.06 per unit of volatility. If you would invest 13,395 in SPDR Global Dow on October 25, 2024 and sell it today you would earn a total of 284.00 from holding SPDR Global Dow or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Emerging vs. SPDR Global Dow
Performance |
| Timeline |
| SPDR SP Emerging |
| SPDR Global Dow |
SPDR SP and SPDR Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Global
The main advantage of trading using opposite SPDR SP and SPDR Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Global 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 Global will offset losses from the drop in SPDR Global's long position.| SPDR SP vs. SPDR SP Emerging | SPDR SP vs. SPDR SP International | SPDR SP vs. SPDR SP China | SPDR SP vs. SPDR MSCI ACWI |
| SPDR Global vs. iShares Global 100 | SPDR Global vs. iShares MSCI Belgium | SPDR Global vs. iShares MSCI Netherlands | SPDR Global vs. iShares Dow Jones |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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