Correlation Between WisdomTree CBOE and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both WisdomTree CBOE and SPDR SSgA 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 WisdomTree CBOE and SPDR SSgA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree CBOE SP and SPDR SSgA Multi Asset, you can compare the effects of market volatilities on WisdomTree CBOE and SPDR SSgA 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 WisdomTree CBOE with a short position of SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree CBOE and SPDR SSgA.
Diversification Opportunities for WisdomTree CBOE and SPDR SSgA
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and SPDR is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree CBOE SP and SPDR SSgA Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Multi and WisdomTree CBOE 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 WisdomTree CBOE SP are associated (or correlated) with SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Multi has no effect on the direction of WisdomTree CBOE i.e., WisdomTree CBOE and SPDR SSgA go up and down completely randomly.
Pair Corralation between WisdomTree CBOE and SPDR SSgA
Given the investment horizon of 90 days WisdomTree CBOE SP is expected to generate 0.97 times more return on investment than SPDR SSgA. However, WisdomTree CBOE SP is 1.03 times less risky than SPDR SSgA. It trades about 0.11 of its potential returns per unit of risk. SPDR SSgA Multi Asset is currently generating about 0.08 per unit of risk. If you would invest 2,994 in WisdomTree CBOE SP on September 1, 2024 and sell it today you would earn a total of 390.00 from holding WisdomTree CBOE SP or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
WisdomTree CBOE SP vs. SPDR SSgA Multi Asset
Performance |
| Timeline |
| WisdomTree CBOE SP |
| SPDR SSgA Multi |
WisdomTree CBOE and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree CBOE and SPDR SSgA
The main advantage of trading using opposite WisdomTree CBOE and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree CBOE position performs unexpectedly, SPDR SSgA 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 SSgA will offset losses from the drop in SPDR SSgA's long position.| WisdomTree CBOE vs. Invesco SP 500 | WisdomTree CBOE vs. WisdomTree Managed Futures | WisdomTree CBOE vs. SPDR MSCI Emerging | WisdomTree CBOE vs. WisdomTree Dynamic Currency |
| SPDR SSgA vs. SPDR SSgA Global | SPDR SSgA vs. SPDR SSgA Income | SPDR SSgA vs. VanEck Inflation Allocation | SPDR SSgA vs. SPDR MSCI EAFE |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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