Correlation Between SPDR SP and Formidable ETF
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Formidable 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 Formidable 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 Formidable ETF, you can compare the effects of market volatilities on SPDR SP and Formidable 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 Formidable ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Formidable ETF.
Diversification Opportunities for SPDR SP and Formidable ETF
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Formidable is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable 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 Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of SPDR SP i.e., SPDR SP and Formidable ETF go up and down completely randomly.
Pair Corralation between SPDR SP and Formidable ETF
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.07 times more return on investment than Formidable ETF. However, SPDR SP is 1.07 times more volatile than Formidable ETF. It trades about 0.12 of its potential returns per unit of risk. Formidable ETF is currently generating about -0.04 per unit of risk. If you would invest 54,855 in SPDR SP 500 on November 2, 2024 and sell it today you would earn a total of 5,649 from holding SPDR SP 500 or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Formidable ETF
Performance |
| Timeline |
| SPDR SP 500 |
| Formidable ETF |
SPDR SP and Formidable ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Formidable ETF
The main advantage of trading using opposite SPDR SP and Formidable ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Formidable 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 Formidable ETF will offset losses from the drop in Formidable ETF's long position.| SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class | SPDR SP vs. Northern Lights | SPDR SP vs. VanEck Vectors Moodys |
| Formidable ETF vs. Franklin Liberty Systematic | Formidable ETF vs. Alger Mid Cap | Formidable ETF vs. Tidal ETF Trust | Formidable ETF vs. First Trust Managed |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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