Correlation Between SPDR SP and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR SP 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 SP 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 SPDR SP 500, you can compare the effects of market volatilities on SPDR SP and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR SP.
Diversification Opportunities for SPDR SP and SPDR SP
Almost no diversification
The 3 months correlation between SPDR and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR SP go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR SP
Given the investment horizon of 90 days SPDR SP 400 is expected to generate 1.35 times more return on investment than SPDR SP. However, SPDR SP is 1.35 times more volatile than SPDR SP 500. It trades about 0.11 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.15 per unit of risk. If you would invest 6,928 in SPDR SP 400 on August 24, 2024 and sell it today you would earn a total of 2,266 from holding SPDR SP 400 or generate 32.71% 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 400 vs. SPDR SP 500
Performance |
| Timeline |
| SPDR SP 400 |
| SPDR SP 500 |
SPDR SP and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR SP
The main advantage of trading using opposite SPDR SP and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| SPDR SP vs. Vanguard Mid Cap Growth | SPDR SP vs. ARK Innovation ETF | SPDR SP vs. iShares SP Mid Cap | SPDR SP vs. iShares Morningstar Mid Cap |
| SPDR SP vs. SPDR Nuveen Municipal | SPDR SP vs. SPDR SP 400 | SPDR SP vs. SPDR SP 400 | SPDR SP vs. SPDR SP 1500 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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