Correlation Between SPDR SP and CHIR
Can any of the company-specific risk be diversified away by investing in both SPDR SP and CHIR 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 CHIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP China and CHIR, you can compare the effects of market volatilities on SPDR SP and CHIR 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 CHIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and CHIR.
Diversification Opportunities for SPDR SP and CHIR
Very good diversification
The 3 months correlation between SPDR and CHIR is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China and CHIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIR 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 China are associated (or correlated) with CHIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIR has no effect on the direction of SPDR SP i.e., SPDR SP and CHIR go up and down completely randomly.
Pair Corralation between SPDR SP and CHIR
If you would invest 6,532 in SPDR SP China on September 12, 2024 and sell it today you would earn a total of 1,409 from holding SPDR SP China or generate 21.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.56% |
| Values | Daily Returns |
SPDR SP China vs. CHIR
Performance |
| Timeline |
| SPDR SP China |
| CHIR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR SP and CHIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and CHIR
The main advantage of trading using opposite SPDR SP and CHIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, CHIR 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 CHIR will offset losses from the drop in CHIR's long position.| SPDR SP vs. KraneShares CSI China | SPDR SP vs. Invesco China Technology | SPDR SP vs. iShares MSCI India | SPDR SP vs. Xtrackers Harvest CSI |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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