Correlation Between SPDR Kensho and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both SPDR Kensho and SPDR Galaxy 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 Kensho and SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Kensho New and SPDR Galaxy Hedged, you can compare the effects of market volatilities on SPDR Kensho and SPDR Galaxy 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 Kensho with a short position of SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and SPDR Galaxy.
Diversification Opportunities for SPDR Kensho and SPDR Galaxy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and SPDR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and SPDR Galaxy Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Hedged and SPDR Kensho 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 Kensho New are associated (or correlated) with SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Hedged has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and SPDR Galaxy go up and down completely randomly.
Pair Corralation between SPDR Kensho and SPDR Galaxy
Given the investment horizon of 90 days SPDR Kensho is expected to generate 3.16 times less return on investment than SPDR Galaxy. But when comparing it to its historical volatility, SPDR Kensho New is 2.43 times less risky than SPDR Galaxy. It trades about 0.18 of its potential returns per unit of risk. SPDR Galaxy Hedged is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,810 in SPDR Galaxy Hedged on August 25, 2024 and sell it today you would earn a total of 945.00 from holding SPDR Galaxy Hedged or generate 33.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Kensho New vs. SPDR Galaxy Hedged
Performance |
| Timeline |
| SPDR Kensho New |
| SPDR Galaxy Hedged |
SPDR Kensho and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Kensho and SPDR Galaxy
The main advantage of trading using opposite SPDR Kensho and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho position performs unexpectedly, SPDR Galaxy 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 Galaxy will offset losses from the drop in SPDR Galaxy's long position.| SPDR Kensho vs. SPDR Kensho Clean | SPDR Kensho vs. SPDR SP Kensho | SPDR Kensho vs. SPDR SP Kensho | SPDR Kensho vs. SPDR SP Kensho |
| SPDR Galaxy vs. SPDR Kensho New | SPDR Galaxy vs. Global X FinTech | SPDR Galaxy vs. iShares Genomics Immunology | SPDR Galaxy vs. Aquagold International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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