Correlation Between SPDR SP and Capital Group
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Capital Group 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 Capital Group 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 Capital Group Global, you can compare the effects of market volatilities on SPDR SP and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Capital Group.
Diversification Opportunities for SPDR SP and Capital Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Capital is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of SPDR SP i.e., SPDR SP and Capital Group go up and down completely randomly.
Pair Corralation between SPDR SP and Capital Group
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 0.94 times more return on investment than Capital Group. However, SPDR SP 500 is 1.07 times less risky than Capital Group. It trades about 0.14 of its potential returns per unit of risk. Capital Group Global is currently generating about -0.03 per unit of risk. If you would invest 57,004 in SPDR SP 500 on August 26, 2024 and sell it today you would earn a total of 2,547 from holding SPDR SP 500 or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Capital Group Global
Performance |
| Timeline |
| SPDR SP 500 |
| Capital Group Global |
SPDR SP and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Capital Group
The main advantage of trading using opposite SPDR SP and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group'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 |
| Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Dividend | Capital Group vs. Capital Group International | Capital Group vs. Capital Group Core |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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