Correlation Between SPDR SP and WisdomTree Multifactor
Can any of the company-specific risk be diversified away by investing in both SPDR SP and WisdomTree Multifactor 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 WisdomTree Multifactor 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 WisdomTree Multifactor, you can compare the effects of market volatilities on SPDR SP and WisdomTree Multifactor 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 WisdomTree Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and WisdomTree Multifactor.
Diversification Opportunities for SPDR SP and WisdomTree Multifactor
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and WisdomTree is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and WisdomTree Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Multifactor 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 WisdomTree Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Multifactor has no effect on the direction of SPDR SP i.e., SPDR SP and WisdomTree Multifactor go up and down completely randomly.
Pair Corralation between SPDR SP and WisdomTree Multifactor
Considering the 90-day investment horizon SPDR SP MIDCAP is expected to generate 1.42 times more return on investment than WisdomTree Multifactor. However, SPDR SP is 1.42 times more volatile than WisdomTree Multifactor. It trades about 0.35 of its potential returns per unit of risk. WisdomTree Multifactor is currently generating about 0.42 per unit of risk. If you would invest 56,560 in SPDR SP MIDCAP on September 1, 2024 and sell it today you would earn a total of 5,026 from holding SPDR SP MIDCAP or generate 8.89% 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. WisdomTree Multifactor
Performance |
| Timeline |
| SPDR SP MIDCAP |
| WisdomTree Multifactor |
SPDR SP and WisdomTree Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and WisdomTree Multifactor
The main advantage of trading using opposite SPDR SP and WisdomTree Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, WisdomTree Multifactor 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 WisdomTree Multifactor will offset losses from the drop in WisdomTree Multifactor'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 |
| WisdomTree Multifactor vs. Freedom Day Dividend | WisdomTree Multifactor vs. iShares MSCI China | WisdomTree Multifactor vs. iShares Dividend and | WisdomTree Multifactor 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |