Correlation Between Roundhill Magnificent and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Roundhill Magnificent 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 Roundhill Magnificent and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Magnificent Seven and SPDR SP Health, you can compare the effects of market volatilities on Roundhill Magnificent 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 Roundhill Magnificent with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Magnificent and SPDR SP.
Diversification Opportunities for Roundhill Magnificent and SPDR SP
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Roundhill and SPDR is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven and SPDR SP Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Health and Roundhill Magnificent 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 Roundhill Magnificent Seven 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 Health has no effect on the direction of Roundhill Magnificent i.e., Roundhill Magnificent and SPDR SP go up and down completely randomly.
Pair Corralation between Roundhill Magnificent and SPDR SP
Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to generate 1.55 times more return on investment than SPDR SP. However, Roundhill Magnificent is 1.55 times more volatile than SPDR SP Health. It trades about 0.23 of its potential returns per unit of risk. SPDR SP Health is currently generating about 0.19 per unit of risk. If you would invest 4,691 in Roundhill Magnificent Seven on August 24, 2024 and sell it today you would earn a total of 419.00 from holding Roundhill Magnificent Seven or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roundhill Magnificent Seven vs. SPDR SP Health
Performance |
| Timeline |
| Roundhill Magnificent |
| SPDR SP Health |
Roundhill Magnificent and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Magnificent and SPDR SP
The main advantage of trading using opposite Roundhill Magnificent and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Magnificent 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.| Roundhill Magnificent vs. SPDR SP Health | Roundhill Magnificent vs. SPDR SP Health | Roundhill Magnificent vs. Aquagold International | Roundhill Magnificent vs. Morningstar Unconstrained Allocation |
| SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Software | SPDR SP vs. Invesco SP SmallCap | SPDR SP vs. SPDR SP Pharmaceuticals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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