Correlation Between SPDR SP and Main International
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Main International 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 Main International 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 Main International ETF, you can compare the effects of market volatilities on SPDR SP and Main International 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 Main International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Main International.
Diversification Opportunities for SPDR SP and Main International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Main is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP World and Main International ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main International ETF 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 Main International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main International ETF has no effect on the direction of SPDR SP i.e., SPDR SP and Main International go up and down completely randomly.
Pair Corralation between SPDR SP and Main International
Given the investment horizon of 90 days SPDR SP World is expected to generate 0.95 times more return on investment than Main International. However, SPDR SP World is 1.05 times less risky than Main International. It trades about 0.05 of its potential returns per unit of risk. Main International ETF is currently generating about 0.04 per unit of risk. If you would invest 3,138 in SPDR SP World on August 28, 2024 and sell it today you would earn a total of 404.00 from holding SPDR SP World or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP World vs. Main International ETF
Performance |
| Timeline |
| SPDR SP World |
| Main International ETF |
SPDR SP and Main International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Main International
The main advantage of trading using opposite SPDR SP and Main International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Main International 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 Main International will offset losses from the drop in Main International's long position.| SPDR SP vs. Dimensional Core Equity | SPDR SP vs. Dimensional Emerging Core | SPDR SP vs. Dimensional Targeted Value | SPDR SP vs. Dimensional Small Cap |
| Main International vs. ADTRAN Inc | Main International vs. International Business Machines | Main International vs. Integrated Ventures | Main International vs. Harmonic |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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