Correlation Between T Rex and SPDR SP
Can any of the company-specific risk be diversified away by investing in both T Rex 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 T Rex and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rex 2X Long and SPDR SP Retail, you can compare the effects of market volatilities on T Rex 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 T Rex with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and SPDR SP.
Diversification Opportunities for T Rex and SPDR SP
Poor diversification
The 3 months correlation between NVDX and SPDR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and SPDR SP Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Retail and T Rex 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 T Rex 2X Long 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 Retail has no effect on the direction of T Rex i.e., T Rex and SPDR SP go up and down completely randomly.
Pair Corralation between T Rex and SPDR SP
Given the investment horizon of 90 days T Rex 2X Long is expected to generate 4.82 times more return on investment than SPDR SP. However, T Rex is 4.82 times more volatile than SPDR SP Retail. It trades about 0.05 of its potential returns per unit of risk. SPDR SP Retail is currently generating about 0.11 per unit of risk. If you would invest 1,584 in T Rex 2X Long on August 28, 2024 and sell it today you would earn a total of 103.00 from holding T Rex 2X Long or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rex 2X Long vs. SPDR SP Retail
Performance |
| Timeline |
| T Rex 2X |
| SPDR SP Retail |
T Rex and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rex and SPDR SP
The main advantage of trading using opposite T Rex and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex 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.| T Rex vs. Direxion Daily SP | T Rex vs. Direxion Daily Semiconductor | T Rex vs. Direxion Daily Semiconductor |
| SPDR SP vs. SPDR SP Homebuilders | SPDR SP vs. Consumer Discretionary Select | SPDR SP vs. SPDR SP Metals | SPDR SP vs. Industrial Select Sector |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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