Correlation Between Palmer Square and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Palmer Square 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 Palmer Square and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palmer Square Funds and SPDR SP 500, you can compare the effects of market volatilities on Palmer Square 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 Palmer Square with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palmer Square and SPDR SP.
Diversification Opportunities for Palmer Square and SPDR SP
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Palmer and SPDR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Palmer Square Funds 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 Palmer Square 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 Palmer Square Funds 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 Palmer Square i.e., Palmer Square and SPDR SP go up and down completely randomly.
Pair Corralation between Palmer Square and SPDR SP
Given the investment horizon of 90 days Palmer Square is expected to generate 2.86 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Palmer Square Funds is 7.24 times less risky than SPDR SP. It trades about 0.29 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 59,690 in SPDR SP 500 on September 13, 2024 and sell it today you would earn a total of 747.00 from holding SPDR SP 500 or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palmer Square Funds vs. SPDR SP 500
Performance |
| Timeline |
| Palmer Square Funds |
| SPDR SP 500 |
Palmer Square and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palmer Square and SPDR SP
The main advantage of trading using opposite Palmer Square and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palmer Square 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.| Palmer Square vs. VanEck Vectors Moodys | Palmer Square vs. BondBloxx ETF Trust | Palmer Square vs. Vanguard ESG Corporate | Palmer Square vs. Vanguard Intermediate Term Corporate |
| SPDR SP vs. Vanguard SP 500 | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class | SPDR SP vs. Northern Lights |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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