Correlation Between Freedom Day and SPDR Galaxy

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Can any of the company-specific risk be diversified away by investing in both Freedom Day 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 Freedom Day and SPDR Galaxy 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 Galaxy Transformative, you can compare the effects of market volatilities on Freedom Day 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 Freedom Day with a short position of SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and SPDR Galaxy.

Diversification Opportunities for Freedom Day and SPDR Galaxy

FreedomSPDRDiversified AwayFreedomSPDRDiversified Away100%
0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Freedom and SPDR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and SPDR Galaxy Transformative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Transfor 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 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 Transfor has no effect on the direction of Freedom Day i.e., Freedom Day and SPDR Galaxy go up and down completely randomly.

Pair Corralation between Freedom Day and SPDR Galaxy

Given the investment horizon of 90 days Freedom Day is expected to generate 5.24 times less return on investment than SPDR Galaxy. But when comparing it to its historical volatility, Freedom Day Dividend is 3.43 times less risky than SPDR Galaxy. It trades about 0.06 of its potential returns per unit of risk. SPDR Galaxy Transformative is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,436  in SPDR Galaxy Transformative on November 21, 2024 and sell it today you would earn a total of  703.00  from holding SPDR Galaxy Transformative or generate 28.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy48.89%
ValuesDaily Returns

Freedom Day Dividend  vs.  SPDR Galaxy Transformative

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15MBOX TEKX
       Timeline  
Freedom Day Dividend 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb32.53333.53434.535
SPDR Galaxy Transfor 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days SPDR Galaxy Transformative has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, SPDR Galaxy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2728293031323334

Freedom Day and SPDR Galaxy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.44-1.83-1.22-0.6-0.01020.591.21.822.443.05 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15MBOX TEKX
       Returns  

Pair Trading with Freedom Day and SPDR Galaxy

The main advantage of trading using opposite Freedom Day and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Day 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.
The idea behind Freedom Day Dividend and SPDR Galaxy Transformative pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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