Correlation Between SPDR Portfolio and FlexShares Disciplined
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and FlexShares Disciplined 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 FlexShares Disciplined into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Mortgage and FlexShares Disciplined Duration, you can compare the effects of market volatilities on SPDR Portfolio and FlexShares Disciplined 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 FlexShares Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and FlexShares Disciplined.
Diversification Opportunities for SPDR Portfolio and FlexShares Disciplined
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and FlexShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Mortgage and FlexShares Disciplined Duratio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Disciplined 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 Mortgage are associated (or correlated) with FlexShares Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Disciplined has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and FlexShares Disciplined go up and down completely randomly.
Pair Corralation between SPDR Portfolio and FlexShares Disciplined
Given the investment horizon of 90 days SPDR Portfolio Mortgage is expected to generate 1.24 times more return on investment than FlexShares Disciplined. However, SPDR Portfolio is 1.24 times more volatile than FlexShares Disciplined Duration. It trades about 0.1 of its potential returns per unit of risk. FlexShares Disciplined Duration is currently generating about 0.08 per unit of risk. If you would invest 2,180 in SPDR Portfolio Mortgage on August 30, 2024 and sell it today you would earn a total of 20.00 from holding SPDR Portfolio Mortgage or generate 0.92% 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 Mortgage vs. FlexShares Disciplined Duratio
Performance |
| Timeline |
| SPDR Portfolio Mortgage |
| FlexShares Disciplined |
SPDR Portfolio and FlexShares Disciplined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and FlexShares Disciplined
The main advantage of trading using opposite SPDR Portfolio and FlexShares Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, FlexShares Disciplined 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 FlexShares Disciplined will offset losses from the drop in FlexShares Disciplined's long position.| SPDR Portfolio vs. iShares MBS ETF | SPDR Portfolio vs. iShares Core Total | SPDR Portfolio vs. iShares 10 20 Year | SPDR Portfolio vs. iShares Short Treasury |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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