Correlation Between Virtus ETF and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Virtus ETF 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 Virtus ETF and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus ETF Trust and SPDR SP 600, you can compare the effects of market volatilities on Virtus ETF 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 Virtus ETF with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus ETF and SPDR SP.
Diversification Opportunities for Virtus ETF and SPDR SP
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virtus and SPDR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and SPDR SP 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 600 and Virtus ETF 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 Virtus ETF Trust 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 600 has no effect on the direction of Virtus ETF i.e., Virtus ETF and SPDR SP go up and down completely randomly.
Pair Corralation between Virtus ETF and SPDR SP
Given the investment horizon of 90 days Virtus ETF is expected to generate 1.05 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Virtus ETF Trust is 1.47 times less risky than SPDR SP. It trades about 0.23 of its potential returns per unit of risk. SPDR SP 600 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 8,248 in SPDR SP 600 on September 12, 2024 and sell it today you would earn a total of 1,118 from holding SPDR SP 600 or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus ETF Trust vs. SPDR SP 600
Performance |
| Timeline |
| Virtus ETF Trust |
| SPDR SP 600 |
Virtus ETF and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus ETF and SPDR SP
The main advantage of trading using opposite Virtus ETF and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus ETF 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.| Virtus ETF vs. iShares Small Cap | Virtus ETF vs. Pacer Cash Cows | Virtus ETF vs. GXO Logistics | Virtus ETF vs. Amplify CWP Enhanced |
| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. JPMorgan Fundamental Data |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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