Correlation Between SPDR SP and Xtrackers FTSE
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Xtrackers FTSE 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 Xtrackers FTSE 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 Xtrackers FTSE Developed, you can compare the effects of market volatilities on SPDR SP and Xtrackers FTSE 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 Xtrackers FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Xtrackers FTSE.
Diversification Opportunities for SPDR SP and Xtrackers FTSE
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Xtrackers is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Xtrackers FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers FTSE Developed 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 Xtrackers FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers FTSE Developed has no effect on the direction of SPDR SP i.e., SPDR SP and Xtrackers FTSE go up and down completely randomly.
Pair Corralation between SPDR SP and Xtrackers FTSE
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.02 times more return on investment than Xtrackers FTSE. However, SPDR SP is 1.02 times more volatile than Xtrackers FTSE Developed. It trades about 0.11 of its potential returns per unit of risk. Xtrackers FTSE Developed is currently generating about 0.06 per unit of risk. If you would invest 38,796 in SPDR SP 500 on September 4, 2024 and sell it today you would earn a total of 21,567 from holding SPDR SP 500 or generate 55.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Xtrackers FTSE Developed
Performance |
| Timeline |
| SPDR SP 500 |
| Xtrackers FTSE Developed |
SPDR SP and Xtrackers FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Xtrackers FTSE
The main advantage of trading using opposite SPDR SP and Xtrackers FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Xtrackers FTSE 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 Xtrackers FTSE will offset losses from the drop in Xtrackers FTSE's long position.| SPDR SP vs. SPDR Gold Shares | SPDR SP vs. Vanguard Real Estate | SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging |
| Xtrackers FTSE vs. Xtrackers Russell Multifactor | Xtrackers FTSE vs. Xtrackers MSCI All | Xtrackers FTSE vs. WisdomTree Dynamic Currency | Xtrackers FTSE vs. Xtrackers MSCI Eurozone |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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