Correlation Between SPDR Portfolio and CI WisdomTree
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and CI WisdomTree 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 CI WisdomTree 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 CI WisdomTree Canada, you can compare the effects of market volatilities on SPDR Portfolio and CI WisdomTree 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 CI WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and CI WisdomTree.
Diversification Opportunities for SPDR Portfolio and CI WisdomTree
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and DGRC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and CI WisdomTree Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI WisdomTree Canada 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 CI WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI WisdomTree Canada has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and CI WisdomTree go up and down completely randomly.
Pair Corralation between SPDR Portfolio and CI WisdomTree
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 1.18 times more return on investment than CI WisdomTree. However, SPDR Portfolio is 1.18 times more volatile than CI WisdomTree Canada. It trades about 0.11 of its potential returns per unit of risk. CI WisdomTree Canada is currently generating about 0.07 per unit of risk. If you would invest 4,779 in SPDR Portfolio SP on September 2, 2024 and sell it today you would earn a total of 2,596 from holding SPDR Portfolio SP or generate 54.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. CI WisdomTree Canada
Performance |
| Timeline |
| SPDR Portfolio SP |
| CI WisdomTree Canada |
SPDR Portfolio and CI WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and CI WisdomTree
The main advantage of trading using opposite SPDR Portfolio and CI WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, CI WisdomTree 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 CI WisdomTree will offset losses from the drop in CI WisdomTree's long position.| SPDR Portfolio vs. SPDR Portfolio Emerging | SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Russell Small |
| CI WisdomTree vs. Vanguard FTSE Canadian | CI WisdomTree vs. Vanguard SP 500 | CI WisdomTree vs. iShares Core SPTSX |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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