Correlation Between SPDR SP and Wisdomtree Total
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Wisdomtree Total 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 Wisdomtree Total 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 Wisdomtree Total Dividend, you can compare the effects of market volatilities on SPDR SP and Wisdomtree Total 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 Wisdomtree Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Wisdomtree Total.
Diversification Opportunities for SPDR SP and Wisdomtree Total
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Wisdomtree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Wisdomtree Total Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisdomtree Total Dividend 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 Wisdomtree Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisdomtree Total Dividend has no effect on the direction of SPDR SP i.e., SPDR SP and Wisdomtree Total go up and down completely randomly.
Pair Corralation between SPDR SP and Wisdomtree Total
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 18.14 times more return on investment than Wisdomtree Total. However, SPDR SP is 18.14 times more volatile than Wisdomtree Total Dividend. It trades about 0.19 of its potential returns per unit of risk. Wisdomtree Total Dividend is currently generating about 0.21 per unit of risk. If you would invest 792,575 in SPDR SP 500 on September 4, 2024 and sell it today you would earn a total of 439,539 from holding SPDR SP 500 or generate 55.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.59% |
| Values | Daily Returns |
SPDR SP 500 vs. Wisdomtree Total Dividend
Performance |
| Timeline |
| SPDR SP 500 |
| Wisdomtree Total Dividend |
SPDR SP and Wisdomtree Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Wisdomtree Total
The main advantage of trading using opposite SPDR SP and Wisdomtree Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Wisdomtree Total 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 Wisdomtree Total will offset losses from the drop in Wisdomtree Total's long position.| SPDR SP vs. Vanguard Index Funds | SPDR SP vs. Vanguard Index Funds | SPDR SP vs. Vanguard STAR Funds | SPDR SP vs. iShares Trust |
| Wisdomtree Total vs. Vanguard Index Funds | Wisdomtree Total vs. Vanguard Index Funds | Wisdomtree Total vs. Vanguard STAR Funds | Wisdomtree Total vs. SPDR SP 500 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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