Correlation Between SPDR Portfolio and WisdomTree Mortgage
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and WisdomTree Mortgage 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 Portfolio and WisdomTree Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Aggregate and WisdomTree Mortgage Plus, you can compare the effects of market volatilities on SPDR Portfolio and WisdomTree Mortgage 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 Portfolio with a short position of WisdomTree Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and WisdomTree Mortgage.
Diversification Opportunities for SPDR Portfolio and WisdomTree Mortgage
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and WisdomTree is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and WisdomTree Mortgage Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Mortgage Plus and SPDR Portfolio 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 Portfolio Aggregate are associated (or correlated) with WisdomTree Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Mortgage Plus has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and WisdomTree Mortgage go up and down completely randomly.
Pair Corralation between SPDR Portfolio and WisdomTree Mortgage
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.06 times less return on investment than WisdomTree Mortgage. But when comparing it to its historical volatility, SPDR Portfolio Aggregate is 1.21 times less risky than WisdomTree Mortgage. It trades about 0.07 of its potential returns per unit of risk. WisdomTree Mortgage Plus is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,026 in WisdomTree Mortgage Plus on September 12, 2024 and sell it today you would earn a total of 381.00 from holding WisdomTree Mortgage Plus or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Aggregate vs. WisdomTree Mortgage Plus
Performance |
| Timeline |
| SPDR Portfolio Aggregate |
| WisdomTree Mortgage Plus |
SPDR Portfolio and WisdomTree Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and WisdomTree Mortgage
The main advantage of trading using opposite SPDR Portfolio and WisdomTree Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, WisdomTree Mortgage 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 WisdomTree Mortgage will offset losses from the drop in WisdomTree Mortgage's long position.| SPDR Portfolio vs. ClearShares Ultra Short Maturity | SPDR Portfolio vs. PGIM Active High | SPDR Portfolio vs. Pacer Trendpilot Bond | SPDR Portfolio vs. Pacer Lunt Large |
| WisdomTree Mortgage vs. ClearShares Ultra Short Maturity | WisdomTree Mortgage vs. PGIM Active High | WisdomTree Mortgage vs. Pacer Trendpilot Bond | WisdomTree Mortgage vs. Pacer Lunt Large |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stocks Directory Find actively traded stocks across global markets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |