Correlation Between SPDR MarketAxess and Capital Group
Can any of the company-specific risk be diversified away by investing in both SPDR MarketAxess and Capital Group 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 MarketAxess and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MarketAxess Investment and Capital Group Municipal, you can compare the effects of market volatilities on SPDR MarketAxess and Capital Group 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 MarketAxess with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MarketAxess and Capital Group.
Diversification Opportunities for SPDR MarketAxess and Capital Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Capital is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MarketAxess Investment and Capital Group Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Municipal and SPDR MarketAxess 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 MarketAxess Investment are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Municipal has no effect on the direction of SPDR MarketAxess i.e., SPDR MarketAxess and Capital Group go up and down completely randomly.
Pair Corralation between SPDR MarketAxess and Capital Group
Given the investment horizon of 90 days SPDR MarketAxess Investment is expected to generate 1.97 times more return on investment than Capital Group. However, SPDR MarketAxess is 1.97 times more volatile than Capital Group Municipal. It trades about 0.1 of its potential returns per unit of risk. Capital Group Municipal is currently generating about 0.15 per unit of risk. If you would invest 8,421 in SPDR MarketAxess Investment on August 29, 2024 and sell it today you would earn a total of 1,211 from holding SPDR MarketAxess Investment or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR MarketAxess Investment vs. Capital Group Municipal
Performance |
| Timeline |
| SPDR MarketAxess Inv |
| Capital Group Municipal |
SPDR MarketAxess and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MarketAxess and Capital Group
The main advantage of trading using opposite SPDR MarketAxess and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MarketAxess position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| SPDR MarketAxess vs. SSGA Active Trust | SPDR MarketAxess vs. SPDR Series Trust | SPDR MarketAxess vs. SPDR Bloomberg Barclays | SPDR MarketAxess vs. SSGA Active Trust |
| Capital Group vs. Capital Group Multi Sector | Capital Group vs. Capital Group Short | Capital Group vs. Capital Group Global | Capital Group vs. Capital Group Dividend |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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