Correlation Between ETF Series and SPDR SP
Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and SPDR SP Dividend, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and SPDR SP.
Diversification Opportunities for ETF Series and SPDR SP
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETF and SPDR is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend and ETF Series 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 ETF Series Solutions 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 Dividend has no effect on the direction of ETF Series i.e., ETF Series and SPDR SP go up and down completely randomly.
Pair Corralation between ETF Series and SPDR SP
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 1.49 times more return on investment than SPDR SP. However, ETF Series is 1.49 times more volatile than SPDR SP Dividend. It trades about 0.18 of its potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.16 per unit of risk. If you would invest 2,625 in ETF Series Solutions on September 3, 2024 and sell it today you would earn a total of 553.00 from holding ETF Series Solutions or generate 21.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. SPDR SP Dividend
Performance |
| Timeline |
| ETF Series Solutions |
| SPDR SP Dividend |
ETF Series and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and SPDR SP
The main advantage of trading using opposite ETF Series and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.| ETF Series vs. AAM Low Duration | ETF Series vs. 6 Meridian Low | ETF Series vs. Exchange Listed Funds | ETF Series vs. 6 Meridian Mega |
| SPDR SP vs. iShares Select Dividend | SPDR SP vs. Vanguard Dividend Appreciation | SPDR SP vs. Vanguard High Dividend | SPDR SP vs. ProShares SP 500 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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