Correlation Between SP Funds and SPDR Bloomberg
Can any of the company-specific risk be diversified away by investing in both SP Funds and SPDR Bloomberg 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 SP Funds and SPDR Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Funds Dow and SPDR Bloomberg Short, you can compare the effects of market volatilities on SP Funds and SPDR Bloomberg 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 SP Funds with a short position of SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Funds and SPDR Bloomberg.
Diversification Opportunities for SP Funds and SPDR Bloomberg
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPSK and SPDR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SP Funds Dow and SPDR Bloomberg Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Short and SP Funds 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 SP Funds Dow are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Short has no effect on the direction of SP Funds i.e., SP Funds and SPDR Bloomberg go up and down completely randomly.
Pair Corralation between SP Funds and SPDR Bloomberg
Given the investment horizon of 90 days SP Funds Dow is expected to generate 0.64 times more return on investment than SPDR Bloomberg. However, SP Funds Dow is 1.57 times less risky than SPDR Bloomberg. It trades about -0.03 of its potential returns per unit of risk. SPDR Bloomberg Short is currently generating about -0.12 per unit of risk. If you would invest 1,810 in SP Funds Dow on August 24, 2024 and sell it today you would lose (5.00) from holding SP Funds Dow or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP Funds Dow vs. SPDR Bloomberg Short
Performance |
| Timeline |
| SP Funds Dow |
| SPDR Bloomberg Short |
SP Funds and SPDR Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Funds and SPDR Bloomberg
The main advantage of trading using opposite SP Funds and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Funds position performs unexpectedly, SPDR Bloomberg 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 SPDR Bloomberg will offset losses from the drop in SPDR Bloomberg's long position.| SP Funds vs. Invesco Fundamental Investment | SP Funds vs. iShares International High | SP Funds vs. VanEck International High |
| SPDR Bloomberg vs. Invesco Fundamental Investment | SPDR Bloomberg vs. iShares International High | SPDR Bloomberg vs. VanEck International High |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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