Correlation Between SPDR SP and AB Active
Can any of the company-specific risk be diversified away by investing in both SPDR SP and AB Active 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 AB Active 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 AB Active ETFs,, you can compare the effects of market volatilities on SPDR SP and AB Active 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 AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and AB Active.
Diversification Opportunities for SPDR SP and AB Active
No risk reduction
The 3 months correlation between SPDR and LRGC is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, 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 AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of SPDR SP i.e., SPDR SP and AB Active go up and down completely randomly.
Pair Corralation between SPDR SP and AB Active
Considering the 90-day investment horizon SPDR SP is expected to generate 1.01 times less return on investment than AB Active. But when comparing it to its historical volatility, SPDR SP 500 is 1.02 times less risky than AB Active. It trades about 0.18 of its potential returns per unit of risk. AB Active ETFs, is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,720 in AB Active ETFs, on August 28, 2024 and sell it today you would earn a total of 232.00 from holding AB Active ETFs, or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. AB Active ETFs,
Performance |
| Timeline |
| SPDR SP 500 |
| AB Active ETFs, |
SPDR SP and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and AB Active
The main advantage of trading using opposite SPDR SP and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, AB Active 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 AB Active will offset losses from the drop in AB Active'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 |
| AB Active vs. FT Vest Equity | AB Active vs. Northern Lights | AB Active vs. Dimensional International High | AB Active 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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