Correlation Between SPDR SP and Barrons 400
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Barrons 400 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 Barrons 400 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 Barrons 400 ETF, you can compare the effects of market volatilities on SPDR SP and Barrons 400 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 Barrons 400. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Barrons 400.
Diversification Opportunities for SPDR SP and Barrons 400
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Barrons is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Barrons 400 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrons 400 ETF 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 Barrons 400. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrons 400 ETF has no effect on the direction of SPDR SP i.e., SPDR SP and Barrons 400 go up and down completely randomly.
Pair Corralation between SPDR SP and Barrons 400
Considering the 90-day investment horizon SPDR SP is expected to generate 1.29 times less return on investment than Barrons 400. But when comparing it to its historical volatility, SPDR SP 500 is 1.29 times less risky than Barrons 400. It trades about 0.14 of its potential returns per unit of risk. Barrons 400 ETF is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,624 in Barrons 400 ETF on September 1, 2024 and sell it today you would earn a total of 1,297 from holding Barrons 400 ETF or generate 19.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
SPDR SP 500 vs. Barrons 400 ETF
Performance |
| Timeline |
| SPDR SP 500 |
| Barrons 400 ETF |
SPDR SP and Barrons 400 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Barrons 400
The main advantage of trading using opposite SPDR SP and Barrons 400 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Barrons 400 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 Barrons 400 will offset losses from the drop in Barrons 400's long position.| SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class |
| Barrons 400 vs. iShares Small Cap | Barrons 400 vs. Invesco ESG NASDAQ | Barrons 400 vs. Invesco ESG NASDAQ | Barrons 400 vs. BlackRock Carbon Transition |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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