Correlation Between SmartETFs Smart and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SmartETFs Smart 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 SmartETFs Smart and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SmartETFs Smart Transportation and SPDR SP Kensho, you can compare the effects of market volatilities on SmartETFs Smart 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 SmartETFs Smart with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartETFs Smart and SPDR SP.
Diversification Opportunities for SmartETFs Smart and SPDR SP
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SmartETFs and SPDR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Smart Transportation and SPDR SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Kensho and SmartETFs Smart 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 SmartETFs Smart Transportation 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 Kensho has no effect on the direction of SmartETFs Smart i.e., SmartETFs Smart and SPDR SP go up and down completely randomly.
Pair Corralation between SmartETFs Smart and SPDR SP
Given the investment horizon of 90 days SmartETFs Smart is expected to generate 6.25 times less return on investment than SPDR SP. But when comparing it to its historical volatility, SmartETFs Smart Transportation is 1.61 times less risky than SPDR SP. It trades about 0.07 of its potential returns per unit of risk. SPDR SP Kensho is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,691 in SPDR SP Kensho on September 2, 2024 and sell it today you would earn a total of 203.00 from holding SPDR SP Kensho or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SmartETFs Smart Transportation vs. SPDR SP Kensho
Performance |
| Timeline |
| SmartETFs Smart Tran |
| SPDR SP Kensho |
SmartETFs Smart and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SmartETFs Smart and SPDR SP
The main advantage of trading using opposite SmartETFs Smart and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartETFs Smart 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.| SmartETFs Smart vs. SPDR SP Kensho | SmartETFs Smart vs. KraneShares Electric Vehicles | SmartETFs Smart vs. iShares Self Driving EV | SmartETFs Smart vs. SPDR SP Kensho |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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