Correlation Between SPDR SP and Popular Income
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Popular Income 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 Popular Income 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 Popular Income Plus, you can compare the effects of market volatilities on SPDR SP and Popular Income 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 Popular Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Popular Income.
Diversification Opportunities for SPDR SP and Popular Income
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and Popular is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Popular Income Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular Income Plus 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 Popular Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular Income Plus has no effect on the direction of SPDR SP i.e., SPDR SP and Popular Income go up and down completely randomly.
Pair Corralation between SPDR SP and Popular Income
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.94 times more return on investment than Popular Income. However, SPDR SP is 1.94 times more volatile than Popular Income Plus. It trades about 0.13 of its potential returns per unit of risk. Popular Income Plus is currently generating about 0.01 per unit of risk. If you would invest 37,218 in SPDR SP 500 on September 14, 2024 and sell it today you would earn a total of 23,215 from holding SPDR SP 500 or generate 62.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Popular Income Plus
Performance |
| Timeline |
| SPDR SP 500 |
| Popular Income Plus |
SPDR SP and Popular Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Popular Income
The main advantage of trading using opposite SPDR SP and Popular Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Popular Income 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 Popular Income will offset losses from the drop in Popular Income's long position.| SPDR SP vs. Vanguard SP 500 | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class | SPDR SP vs. Northern Lights |
| Popular Income vs. Vanguard Total Stock | Popular Income vs. SPDR SP 500 | Popular Income vs. iShares Core SP | Popular Income vs. Vanguard Total Bond |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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