Correlation Between SPDR Dow and South Plains
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and South Plains 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 Dow and South Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and South Plains Financial, you can compare the effects of market volatilities on SPDR Dow and South Plains 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 Dow with a short position of South Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and South Plains.
Diversification Opportunities for SPDR Dow and South Plains
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPDR and South is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and South Plains Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Plains Financial and SPDR Dow 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 Dow Jones are associated (or correlated) with South Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Plains Financial has no effect on the direction of SPDR Dow i.e., SPDR Dow and South Plains go up and down completely randomly.
Pair Corralation between SPDR Dow and South Plains
Considering the 90-day investment horizon SPDR Dow Jones is expected to under-perform the South Plains. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Dow Jones is 3.18 times less risky than South Plains. The etf trades about -0.13 of its potential returns per unit of risk. The South Plains Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,428 in South Plains Financial on September 2, 2024 and sell it today you would earn a total of 461.00 from holding South Plains Financial or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. South Plains Financial
Performance |
| Timeline |
| SPDR Dow Jones |
| South Plains Financial |
SPDR Dow and South Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and South Plains
The main advantage of trading using opposite SPDR Dow and South Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, South Plains 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 South Plains will offset losses from the drop in South Plains' long position.| SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR SP International | SPDR Dow vs. iShares Cohen Steers |
| South Plains vs. Sound Financial Bancorp | South Plains vs. Finward Bancorp | South Plains vs. Franklin Financial Services | South Plains vs. Community West Bancshares |
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.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |