Correlation Between SPDR SP and SPDR SPASX
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR SPASX 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 SPASX 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 SPASX 200, you can compare the effects of market volatilities on SPDR SP and SPDR SPASX 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 SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR SPASX.
Diversification Opportunities for SPDR SP and SPDR SPASX
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and SPDR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and SPDR SPASX 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SPASX 200 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 SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SPASX 200 has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR SPASX go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR SPASX
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 1.81 times more return on investment than SPDR SPASX. However, SPDR SP is 1.81 times more volatile than SPDR SPASX 200. It trades about 0.21 of its potential returns per unit of risk. SPDR SPASX 200 is currently generating about 0.2 per unit of risk. If you would invest 88,408 in SPDR SP 500 on August 29, 2024 and sell it today you would earn a total of 4,338 from holding SPDR SP 500 or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. SPDR SPASX 200
Performance |
| Timeline |
| SPDR SP 500 |
| SPDR SPASX 200 |
SPDR SP and SPDR SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR SPASX
The main advantage of trading using opposite SPDR SP and SPDR SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR SPASX 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 SPASX will offset losses from the drop in SPDR SPASX's long position.| SPDR SP vs. SPDR SPASX 200 | SPDR SP vs. SPDR SPASX 50 | SPDR SP vs. SPDR MSCI World | SPDR SP vs. SPDR Dow Jones |
| SPDR SPASX vs. SPDR SP 500 | SPDR SPASX vs. Vanguard Total Market | SPDR SPASX vs. iShares Core SP | SPDR SPASX vs. iShares Core SP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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