Correlation Between SPDR SP and SPDR Morningstar
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Morningstar 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 SP and SPDR Morningstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and SPDR Morningstar Multi Asset, you can compare the effects of market volatilities on SPDR SP and SPDR Morningstar 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 SP with a short position of SPDR Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Morningstar.
Diversification Opportunities for SPDR SP and SPDR Morningstar
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPDR and SPDR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and SPDR Morningstar Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Morningstar Multi and SPDR SP 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 SP 500 are associated (or correlated) with SPDR Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Morningstar Multi has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Morningstar go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Morningstar
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 1.25 times more return on investment than SPDR Morningstar. However, SPDR SP is 1.25 times more volatile than SPDR Morningstar Multi Asset. It trades about 0.25 of its potential returns per unit of risk. SPDR Morningstar Multi Asset is currently generating about 0.08 per unit of risk. If you would invest 1,027 in SPDR SP 500 on August 28, 2024 and sell it today you would earn a total of 133.00 from holding SPDR SP 500 or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. SPDR Morningstar Multi Asset
Performance |
| Timeline |
| SPDR SP 500 |
| SPDR Morningstar Multi |
SPDR SP and SPDR Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Morningstar
The main advantage of trading using opposite SPDR SP and SPDR Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Morningstar 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 Morningstar will offset losses from the drop in SPDR Morningstar's long position.| SPDR SP vs. Leverage Shares 3x | SPDR SP vs. Leverage Shares 3x | SPDR SP vs. Leverage Shares 3x | SPDR SP vs. WisdomTree Short GBP |
| SPDR Morningstar vs. Vanguard FTSE Developed | SPDR Morningstar vs. Leverage Shares 2x | SPDR Morningstar vs. Amundi Index Solutions | SPDR Morningstar vs. Amundi Index Solutions |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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