Correlation Between SPDR Portfolio and Gotham Enhanced
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Gotham Enhanced 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 Gotham Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and Gotham Enhanced 500, you can compare the effects of market volatilities on SPDR Portfolio and Gotham Enhanced 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 Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Gotham Enhanced.
Diversification Opportunities for SPDR Portfolio and Gotham Enhanced
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Gotham is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Gotham Enhanced 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced 500 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 SP are associated (or correlated) with Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced 500 has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Gotham Enhanced go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Gotham Enhanced
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 1.01 times more return on investment than Gotham Enhanced. However, SPDR Portfolio is 1.01 times more volatile than Gotham Enhanced 500. It trades about 0.12 of its potential returns per unit of risk. Gotham Enhanced 500 is currently generating about 0.11 per unit of risk. If you would invest 4,488 in SPDR Portfolio SP on August 30, 2024 and sell it today you would earn a total of 2,556 from holding SPDR Portfolio SP or generate 56.95% 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 SP vs. Gotham Enhanced 500
Performance |
| Timeline |
| SPDR Portfolio SP |
| Gotham Enhanced 500 |
SPDR Portfolio and Gotham Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Gotham Enhanced
The main advantage of trading using opposite SPDR Portfolio and Gotham Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Gotham Enhanced 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 Gotham Enhanced will offset losses from the drop in Gotham Enhanced's long position.| SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. Invesco NASDAQ 100 | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP |
| Gotham Enhanced vs. Tidal ETF Trust | Gotham Enhanced vs. Gotham Large Value | Gotham Enhanced vs. Goldman Sachs MarketBeta | Gotham Enhanced vs. Swan Hedged Equity |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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