Correlation Between SPDR SP and SPDR Series
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Series 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 Series 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 Series Trust, you can compare the effects of market volatilities on SPDR SP and SPDR Series 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 Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Series.
Diversification Opportunities for SPDR SP and SPDR Series
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and SPDR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Series go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Series
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 1.13 times more return on investment than SPDR Series. However, SPDR SP is 1.13 times more volatile than SPDR Series Trust. It trades about 0.19 of its potential returns per unit of risk. SPDR Series Trust is currently generating about 0.14 per unit of risk. If you would invest 789,661 in SPDR SP 500 on September 2, 2024 and sell it today you would earn a total of 434,339 from holding SPDR SP 500 or generate 55.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
SPDR SP 500 vs. SPDR Series Trust
Performance |
| Timeline |
| SPDR SP 500 |
| SPDR Series Trust |
SPDR SP and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Series
The main advantage of trading using opposite SPDR SP and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Series 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 Series will offset losses from the drop in SPDR Series' long position.| SPDR SP vs. SPDR Dow Jones | SPDR SP vs. SPDR Gold Trust | SPDR SP vs. SPDR Series Trust | SPDR SP vs. SPDR SP Regional |
| SPDR Series vs. Promotora y Operadora | SPDR Series vs. UnitedHealth Group Incorporated | SPDR Series vs. Qulitas Controladora SAB | SPDR Series vs. Hoteles City Express |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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