Correlation Between SPDR SP and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF Trust, you can compare the effects of market volatilities on SPDR SP and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Dimensional ETF.
Diversification Opportunities for SPDR SP and Dimensional ETF
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Dimensional is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of SPDR SP i.e., SPDR SP and Dimensional ETF go up and down completely randomly.
Pair Corralation between SPDR SP and Dimensional ETF
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 2.58 times more return on investment than Dimensional ETF. However, SPDR SP is 2.58 times more volatile than Dimensional ETF Trust. It trades about 0.12 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.06 per unit of risk. If you would invest 50,126 in SPDR SP 500 on August 23, 2024 and sell it today you would earn a total of 9,241 from holding SPDR SP 500 or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Dimensional ETF Trust
Performance |
| Timeline |
| SPDR SP 500 |
| Dimensional ETF Trust |
SPDR SP and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Dimensional ETF
The main advantage of trading using opposite SPDR SP and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF'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 |
| Dimensional ETF vs. Hartford Short Duration | Dimensional ETF vs. American Century Diversified | Dimensional ETF vs. First Trust Short | Dimensional ETF vs. HUMANA INC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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