Correlation Between SPDR Portfolio and DWS
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and DWS 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 DWS 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 DWS, you can compare the effects of market volatilities on SPDR Portfolio and DWS 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 DWS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and DWS.
Diversification Opportunities for SPDR Portfolio and DWS
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and DWS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and DWS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS 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 DWS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and DWS go up and down completely randomly.
Pair Corralation between SPDR Portfolio and DWS
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 0.98 times more return on investment than DWS. However, SPDR Portfolio SP is 1.02 times less risky than DWS. It trades about 0.05 of its potential returns per unit of risk. DWS is currently generating about 0.03 per unit of risk. If you would invest 3,709 in SPDR Portfolio SP on September 2, 2024 and sell it today you would earn a total of 1,209 from holding SPDR Portfolio SP or generate 32.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.85% |
| Values | Daily Returns |
SPDR Portfolio SP vs. DWS
Performance |
| Timeline |
| SPDR Portfolio SP |
| DWS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR Portfolio and DWS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and DWS
The main advantage of trading using opposite SPDR Portfolio and DWS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, DWS 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 DWS will offset losses from the drop in DWS's long position.| SPDR Portfolio vs. Schwab Fundamental Large | SPDR Portfolio vs. Schwab Fundamental International | SPDR Portfolio vs. Schwab Fundamental International | SPDR Portfolio vs. Schwab Fundamental Emerging |
| DWS vs. Schwab Fundamental Large | DWS vs. Schwab Fundamental International | DWS vs. Schwab Fundamental International | DWS vs. Schwab Fundamental Emerging |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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