Correlation Between SPDR SP and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Federated Hermes 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 Federated Hermes 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 Federated Hermes ETF, you can compare the effects of market volatilities on SPDR SP and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Federated Hermes.
Diversification Opportunities for SPDR SP and Federated Hermes
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Federated is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of SPDR SP i.e., SPDR SP and Federated Hermes go up and down completely randomly.
Pair Corralation between SPDR SP and Federated Hermes
Considering the 90-day investment horizon SPDR SP is expected to generate 101.33 times less return on investment than Federated Hermes. But when comparing it to its historical volatility, SPDR SP 500 is 127.54 times less risky than Federated Hermes. It trades about 0.14 of its potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Federated Hermes ETF on September 1, 2024 and sell it today you would earn a total of 2,897 from holding Federated Hermes ETF or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 69.84% |
| Values | Daily Returns |
SPDR SP 500 vs. Federated Hermes ETF
Performance |
| Timeline |
| SPDR SP 500 |
| Federated Hermes ETF |
SPDR SP and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Federated Hermes
The main advantage of trading using opposite SPDR SP and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class |
| Federated Hermes vs. Vanguard Total Stock | Federated Hermes vs. SPDR SP 500 | Federated Hermes vs. iShares Core SP | Federated Hermes vs. Vanguard Dividend Appreciation |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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