Correlation Between SPDR SP and VanEck Video
Can any of the company-specific risk be diversified away by investing in both SPDR SP and VanEck Video 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 VanEck Video 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 VanEck Video Gaming, you can compare the effects of market volatilities on SPDR SP and VanEck Video 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 VanEck Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and VanEck Video.
Diversification Opportunities for SPDR SP and VanEck Video
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and VanEck is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and VanEck Video Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Video Gaming 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 VanEck Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Video Gaming has no effect on the direction of SPDR SP i.e., SPDR SP and VanEck Video go up and down completely randomly.
Pair Corralation between SPDR SP and VanEck Video
Considering the 90-day investment horizon SPDR SP is expected to generate 1.5 times less return on investment than VanEck Video. But when comparing it to its historical volatility, SPDR SP 500 is 1.74 times less risky than VanEck Video. It trades about 0.15 of its potential returns per unit of risk. VanEck Video Gaming is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,482 in VanEck Video Gaming on August 24, 2024 and sell it today you would earn a total of 2,752 from holding VanEck Video Gaming or generate 50.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. VanEck Video Gaming
Performance |
| Timeline |
| SPDR SP 500 |
| VanEck Video Gaming |
SPDR SP and VanEck Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and VanEck Video
The main advantage of trading using opposite SPDR SP and VanEck Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, VanEck Video 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 VanEck Video will offset losses from the drop in VanEck Video'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 |
| VanEck Video vs. iShares Global Financials | VanEck Video vs. iShares Global Tech | VanEck Video vs. iShares Global Healthcare | VanEck Video vs. iShares Telecommunications ETF |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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