Correlation Between SPDR SP and LeaderSharesTM AlphaFactor
Can any of the company-specific risk be diversified away by investing in both SPDR SP and LeaderSharesTM AlphaFactor 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 SP and LeaderSharesTM AlphaFactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP MIDCAP and LeaderSharesTM AlphaFactor Core, you can compare the effects of market volatilities on SPDR SP and LeaderSharesTM AlphaFactor 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 SP with a short position of LeaderSharesTM AlphaFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and LeaderSharesTM AlphaFactor.
Diversification Opportunities for SPDR SP and LeaderSharesTM AlphaFactor
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and LeaderSharesTM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and LeaderSharesTM AlphaFactor Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeaderSharesTM AlphaFactor and SPDR SP 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 SP MIDCAP are associated (or correlated) with LeaderSharesTM AlphaFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeaderSharesTM AlphaFactor has no effect on the direction of SPDR SP i.e., SPDR SP and LeaderSharesTM AlphaFactor go up and down completely randomly.
Pair Corralation between SPDR SP and LeaderSharesTM AlphaFactor
Considering the 90-day investment horizon SPDR SP MIDCAP is expected to under-perform the LeaderSharesTM AlphaFactor. In addition to that, SPDR SP is 1.13 times more volatile than LeaderSharesTM AlphaFactor Core. It trades about -0.13 of its total potential returns per unit of risk. LeaderSharesTM AlphaFactor Core is currently generating about -0.08 per unit of volatility. If you would invest 4,048 in LeaderSharesTM AlphaFactor Core on December 11, 2024 and sell it today you would lose (132.00) from holding LeaderSharesTM AlphaFactor Core or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP MIDCAP vs. LeaderSharesTM AlphaFactor Cor
Performance |
| Timeline |
| SPDR SP MIDCAP |
| LeaderSharesTM AlphaFactor |
SPDR SP and LeaderSharesTM AlphaFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and LeaderSharesTM AlphaFactor
The main advantage of trading using opposite SPDR SP and LeaderSharesTM AlphaFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, LeaderSharesTM AlphaFactor 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 LeaderSharesTM AlphaFactor will offset losses from the drop in LeaderSharesTM AlphaFactor's long position.| SPDR SP vs. iShares Core SP | SPDR SP vs. iShares Russell 2000 | SPDR SP vs. iShares MSCI EAFE | SPDR SP vs. iShares Russell 2000 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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