Correlation Between SPDR SP and VanEck ChiNext
Can any of the company-specific risk be diversified away by investing in both SPDR SP and VanEck ChiNext 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 VanEck ChiNext 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 VanEck ChiNext ETF, you can compare the effects of market volatilities on SPDR SP and VanEck ChiNext 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 VanEck ChiNext. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and VanEck ChiNext.
Diversification Opportunities for SPDR SP and VanEck ChiNext
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and VanEck is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China and VanEck ChiNext ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ChiNext ETF 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 VanEck ChiNext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ChiNext ETF has no effect on the direction of SPDR SP i.e., SPDR SP and VanEck ChiNext go up and down completely randomly.
Pair Corralation between SPDR SP and VanEck ChiNext
Considering the 90-day investment horizon SPDR SP China is expected to under-perform the VanEck ChiNext. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP China is 1.83 times less risky than VanEck ChiNext. The etf trades about -0.18 of its potential returns per unit of risk. The VanEck ChiNext ETF is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,990 in VanEck ChiNext ETF on August 29, 2024 and sell it today you would lose (186.00) from holding VanEck ChiNext ETF or give up 6.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP China vs. VanEck ChiNext ETF
Performance |
| Timeline |
| SPDR SP China |
| VanEck ChiNext ETF |
SPDR SP and VanEck ChiNext Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and VanEck ChiNext
The main advantage of trading using opposite SPDR SP and VanEck ChiNext positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, VanEck ChiNext 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 VanEck ChiNext will offset losses from the drop in VanEck ChiNext's long position.| SPDR SP vs. Invesco Golden Dragon | SPDR SP vs. iShares MSCI Hong | SPDR SP vs. iShares MSCI China | SPDR SP vs. iShares China Large Cap |
| VanEck ChiNext vs. Freedom Day Dividend | VanEck ChiNext vs. Davis Select International | VanEck ChiNext vs. iShares MSCI China | VanEck ChiNext vs. SmartETFs Dividend Builder |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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