Correlation Between SPDR SP and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Russell 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 SPDR Russell 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 SPDR Russell 1000, you can compare the effects of market volatilities on SPDR SP and SPDR Russell 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 SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Russell.
Diversification Opportunities for SPDR SP and SPDR Russell
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and SPDR Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 1000 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 SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 1000 has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Russell go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Russell
Considering the 90-day investment horizon SPDR SP MIDCAP is expected to generate 1.21 times more return on investment than SPDR Russell. However, SPDR SP is 1.21 times more volatile than SPDR Russell 1000. It trades about 0.12 of its potential returns per unit of risk. SPDR Russell 1000 is currently generating about 0.14 per unit of risk. If you would invest 46,057 in SPDR SP MIDCAP on August 25, 2024 and sell it today you would earn a total of 15,014 from holding SPDR SP MIDCAP or generate 32.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP MIDCAP vs. SPDR Russell 1000
Performance |
| Timeline |
| SPDR SP MIDCAP |
| SPDR Russell 1000 |
SPDR SP and SPDR Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Russell
The main advantage of trading using opposite SPDR SP and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Russell 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 Russell will offset losses from the drop in SPDR Russell'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 |
| SPDR Russell vs. Vanguard Mid Cap Index | SPDR Russell vs. Vanguard Extended Market | SPDR Russell vs. iShares Core SP | SPDR Russell vs. SPDR SP MIDCAP |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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