Correlation Between SPDR SP and Professionally Managed
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Professionally Managed 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 Professionally Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 400 and Professionally Managed Portfolios, you can compare the effects of market volatilities on SPDR SP and Professionally Managed 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 Professionally Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Professionally Managed.
Diversification Opportunities for SPDR SP and Professionally Managed
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Professionally is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and Professionally Managed Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professionally Managed 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 400 are associated (or correlated) with Professionally Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professionally Managed has no effect on the direction of SPDR SP i.e., SPDR SP and Professionally Managed go up and down completely randomly.
Pair Corralation between SPDR SP and Professionally Managed
Given the investment horizon of 90 days SPDR SP 400 is expected to generate 0.87 times more return on investment than Professionally Managed. However, SPDR SP 400 is 1.15 times less risky than Professionally Managed. It trades about 0.06 of its potential returns per unit of risk. Professionally Managed Portfolios is currently generating about 0.04 per unit of risk. If you would invest 6,892 in SPDR SP 400 on October 30, 2024 and sell it today you would earn a total of 2,107 from holding SPDR SP 400 or generate 30.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 35.02% |
| Values | Daily Returns |
SPDR SP 400 vs. Professionally Managed Portfol
Performance |
| Timeline |
| SPDR SP 400 |
| Professionally Managed |
SPDR SP and Professionally Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Professionally Managed
The main advantage of trading using opposite SPDR SP and Professionally Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Professionally Managed 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 Professionally Managed will offset losses from the drop in Professionally Managed's long position.| SPDR SP vs. Vanguard Mid Cap Growth | SPDR SP vs. iShares Russell Mid Cap | SPDR SP vs. ARK Innovation ETF | SPDR SP vs. iShares SP Mid Cap |
| Professionally Managed vs. Matthews China Discovery | Professionally Managed vs. Matthews Emerging Markets | Professionally Managed vs. Morgan Stanley Pathway | Professionally Managed vs. Neuberger Berman ETF |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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