Correlation Between Freedom Day and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Freedom Day 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 Freedom Day and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Day Dividend and SPDR SP 1500, you can compare the effects of market volatilities on Freedom Day 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 Freedom Day with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and SPDR SP.
Diversification Opportunities for Freedom Day and SPDR SP
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freedom and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and SPDR SP 1500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 1500 and Freedom Day 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 Freedom Day Dividend 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 1500 has no effect on the direction of Freedom Day i.e., Freedom Day and SPDR SP go up and down completely randomly.
Pair Corralation between Freedom Day and SPDR SP
Given the investment horizon of 90 days Freedom Day is expected to generate 1.69 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Freedom Day Dividend is 1.21 times less risky than SPDR SP. It trades about 0.09 of its potential returns per unit of risk. SPDR SP 1500 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 24,514 in SPDR SP 1500 on August 28, 2024 and sell it today you would earn a total of 2,000 from holding SPDR SP 1500 or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Day Dividend vs. SPDR SP 1500
Performance |
| Timeline |
| Freedom Day Dividend |
| SPDR SP 1500 |
Freedom Day and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Day and SPDR SP
The main advantage of trading using opposite Freedom Day and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Day 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.| Freedom Day vs. BlackRock ETF Trust | Freedom Day vs. Rbb Fund | Freedom Day vs. Virtus ETF Trust | Freedom Day vs. Amplify CWP Enhanced |
| SPDR SP vs. Freedom Day Dividend | SPDR SP vs. Davis Select International | SPDR SP vs. iShares MSCI China | SPDR SP vs. SmartETFs Dividend Builder |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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