Correlation Between SPDR SP and Fidelity International
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Fidelity International 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 Fidelity International 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 Fidelity International High, you can compare the effects of market volatilities on SPDR SP and Fidelity International 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 Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Fidelity International.
Diversification Opportunities for SPDR SP and Fidelity International
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Fidelity is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Fidelity International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of SPDR SP i.e., SPDR SP and Fidelity International go up and down completely randomly.
Pair Corralation between SPDR SP and Fidelity International
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.08 times more return on investment than Fidelity International. However, SPDR SP is 1.08 times more volatile than Fidelity International High. It trades about 0.18 of its potential returns per unit of risk. Fidelity International High is currently generating about -0.24 per unit of risk. If you would invest 58,083 in SPDR SP 500 on August 29, 2024 and sell it today you would earn a total of 1,982 from holding SPDR SP 500 or generate 3.41% 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. Fidelity International High
Performance |
| Timeline |
| SPDR SP 500 |
| Fidelity International |
SPDR SP and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Fidelity International
The main advantage of trading using opposite SPDR SP and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Fidelity International 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 Fidelity International will offset losses from the drop in Fidelity International'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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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