Correlation Between SPDR SP and Exchange Listed
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Exchange Listed 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 Exchange Listed 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 Exchange Listed Funds, you can compare the effects of market volatilities on SPDR SP and Exchange Listed 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 Exchange Listed. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Exchange Listed.
Diversification Opportunities for SPDR SP and Exchange Listed
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Exchange is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds 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 Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of SPDR SP i.e., SPDR SP and Exchange Listed go up and down completely randomly.
Pair Corralation between SPDR SP and Exchange Listed
Considering the 90-day investment horizon SPDR SP is expected to generate 1.88 times less return on investment than Exchange Listed. But when comparing it to its historical volatility, SPDR SP 500 is 1.38 times less risky than Exchange Listed. It trades about 0.15 of its potential returns per unit of risk. Exchange Listed Funds is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,062 in Exchange Listed Funds on August 26, 2024 and sell it today you would earn a total of 166.00 from holding Exchange Listed Funds or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Exchange Listed Funds
Performance |
| Timeline |
| SPDR SP 500 |
| Exchange Listed Funds |
SPDR SP and Exchange Listed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Exchange Listed
The main advantage of trading using opposite SPDR SP and Exchange Listed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Exchange Listed 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 Exchange Listed will offset losses from the drop in Exchange Listed's long position.| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
| Exchange Listed vs. FT Vest Equity | Exchange Listed vs. Northern Lights | Exchange Listed vs. Dimensional International High | Exchange Listed vs. First Trust Exchange Traded |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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