Correlation Between SPDR SP and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IQ MacKay 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 IQ MacKay 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 IQ MacKay ESG, you can compare the effects of market volatilities on SPDR SP and IQ MacKay 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 IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IQ MacKay.
Diversification Opportunities for SPDR SP and IQ MacKay
Poor diversification
The 3 months correlation between SPDR and IQHI is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and IQ MacKay ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay ESG 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 IQ MacKay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ MacKay ESG has no effect on the direction of SPDR SP i.e., SPDR SP and IQ MacKay go up and down completely randomly.
Pair Corralation between SPDR SP and IQ MacKay
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 3.93 times more return on investment than IQ MacKay. However, SPDR SP is 3.93 times more volatile than IQ MacKay ESG. It trades about 0.16 of its potential returns per unit of risk. IQ MacKay ESG 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 1,800 from holding SPDR SP 500 or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. IQ MacKay ESG
Performance |
| Timeline |
| SPDR SP 500 |
| IQ MacKay ESG |
SPDR SP and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IQ MacKay
The main advantage of trading using opposite SPDR SP and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IQ MacKay 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 IQ MacKay will offset losses from the drop in IQ MacKay'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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