Correlation Between SPDR SP and Capital Group
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Capital Group 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 SP and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP World and Capital Group International, you can compare the effects of market volatilities on SPDR SP and Capital Group 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 SP with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Capital Group.
Diversification Opportunities for SPDR SP and Capital Group
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Capital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP World and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and SPDR SP 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 SP World are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of SPDR SP i.e., SPDR SP and Capital Group go up and down completely randomly.
Pair Corralation between SPDR SP and Capital Group
Given the investment horizon of 90 days SPDR SP World is expected to generate 0.98 times more return on investment than Capital Group. However, SPDR SP World is 1.02 times less risky than Capital Group. It trades about -0.12 of its potential returns per unit of risk. Capital Group International is currently generating about -0.19 per unit of risk. If you would invest 3,615 in SPDR SP World on August 30, 2024 and sell it today you would lose (74.00) from holding SPDR SP World or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP World vs. Capital Group International
Performance |
| Timeline |
| SPDR SP World |
| Capital Group Intern |
SPDR SP and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Capital Group
The main advantage of trading using opposite SPDR SP and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| SPDR SP vs. SPDR Portfolio Emerging | SPDR SP vs. SPDR Portfolio SP | SPDR SP vs. SPDR Portfolio SP | SPDR SP vs. SPDR Russell Small |
| Capital Group vs. ABIVAX Socit Anonyme | Capital Group vs. HUMANA INC | Capital Group vs. SCOR PK | Capital Group vs. Aquagold International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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