Correlation Between SPDR SP and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Portfolio 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 Portfolio 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 Portfolio Mortgage, you can compare the effects of market volatilities on SPDR SP and SPDR Portfolio 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 Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Portfolio.
Diversification Opportunities for SPDR SP and SPDR Portfolio
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPDR and SPDR is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and SPDR Portfolio Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Mortgage 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 Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Mortgage has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Portfolio go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Portfolio
Considering the 90-day investment horizon SPDR SP MIDCAP is expected to generate 2.66 times more return on investment than SPDR Portfolio. However, SPDR SP is 2.66 times more volatile than SPDR Portfolio Mortgage. It trades about 0.09 of its potential returns per unit of risk. SPDR Portfolio Mortgage is currently generating about 0.05 per unit of risk. If you would invest 52,352 in SPDR SP MIDCAP on August 27, 2024 and sell it today you would earn a total of 8,719 from holding SPDR SP MIDCAP or generate 16.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP MIDCAP vs. SPDR Portfolio Mortgage
Performance |
| Timeline |
| SPDR SP MIDCAP |
| SPDR Portfolio Mortgage |
SPDR SP and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Portfolio
The main advantage of trading using opposite SPDR SP and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio'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 Portfolio vs. SPDR Portfolio Intermediate | SPDR Portfolio vs. iShares 5 10 Year | SPDR Portfolio vs. SPDR Barclays Long | SPDR Portfolio vs. SPDR Barclays Intermediate |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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