Correlation Between SPDR SP and VictoryShares 500
Can any of the company-specific risk be diversified away by investing in both SPDR SP and VictoryShares 500 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 VictoryShares 500 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 VictoryShares 500 Enhanced, you can compare the effects of market volatilities on SPDR SP and VictoryShares 500 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 VictoryShares 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and VictoryShares 500.
Diversification Opportunities for SPDR SP and VictoryShares 500
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and VictoryShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and VictoryShares 500 Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares 500 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 VictoryShares 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares 500 has no effect on the direction of SPDR SP i.e., SPDR SP and VictoryShares 500 go up and down completely randomly.
Pair Corralation between SPDR SP and VictoryShares 500
Considering the 90-day investment horizon SPDR SP is expected to generate 1.72 times less return on investment than VictoryShares 500. But when comparing it to its historical volatility, SPDR SP 500 is 1.01 times less risky than VictoryShares 500. It trades about 0.15 of its potential returns per unit of risk. VictoryShares 500 Enhanced is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6,991 in VictoryShares 500 Enhanced on August 25, 2024 and sell it today you would earn a total of 330.00 from holding VictoryShares 500 Enhanced or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPDR SP 500 vs. VictoryShares 500 Enhanced
Performance |
| Timeline |
| SPDR SP 500 |
| VictoryShares 500 |
SPDR SP and VictoryShares 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and VictoryShares 500
The main advantage of trading using opposite SPDR SP and VictoryShares 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, VictoryShares 500 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 VictoryShares 500 will offset losses from the drop in VictoryShares 500'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 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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