Correlation Between SPDR Kensho and Roundhill Investments
Can any of the company-specific risk be diversified away by investing in both SPDR Kensho and Roundhill Investments 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 Roundhill Investments 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 Roundhill Investments, you can compare the effects of market volatilities on SPDR Kensho and Roundhill Investments 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 Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and Roundhill Investments.
Diversification Opportunities for SPDR Kensho and Roundhill Investments
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Roundhill is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments 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 Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and Roundhill Investments go up and down completely randomly.
Pair Corralation between SPDR Kensho and Roundhill Investments
Given the investment horizon of 90 days SPDR Kensho is expected to generate 3.26 times less return on investment than Roundhill Investments. But when comparing it to its historical volatility, SPDR Kensho New is 1.91 times less risky than Roundhill Investments. It trades about 0.05 of its potential returns per unit of risk. Roundhill Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,091 in Roundhill Investments on August 26, 2024 and sell it today you would earn a total of 975.00 from holding Roundhill Investments or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.99% |
| Values | Daily Returns |
SPDR Kensho New vs. Roundhill Investments
Performance |
| Timeline |
| SPDR Kensho New |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR Kensho and Roundhill Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Kensho and Roundhill Investments
The main advantage of trading using opposite SPDR Kensho and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' 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 |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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