Correlation Between SPDR SP and Roundhill Magnificent
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Roundhill Magnificent 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 Roundhill Magnificent 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 Roundhill Magnificent Seven, you can compare the effects of market volatilities on SPDR SP and Roundhill Magnificent 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 Roundhill Magnificent. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Roundhill Magnificent.
Diversification Opportunities for SPDR SP and Roundhill Magnificent
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Roundhill is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Roundhill Magnificent Seven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Magnificent 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 Roundhill Magnificent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Magnificent has no effect on the direction of SPDR SP i.e., SPDR SP and Roundhill Magnificent go up and down completely randomly.
Pair Corralation between SPDR SP and Roundhill Magnificent
Considering the 90-day investment horizon SPDR SP is expected to generate 1.78 times less return on investment than Roundhill Magnificent. But when comparing it to its historical volatility, SPDR SP 500 is 1.9 times less risky than Roundhill Magnificent. It trades about 0.14 of its potential returns per unit of risk. Roundhill Magnificent Seven is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,889 in Roundhill Magnificent Seven on August 27, 2024 and sell it today you would earn a total of 215.00 from holding Roundhill Magnificent Seven or generate 4.4% 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. Roundhill Magnificent Seven
Performance |
| Timeline |
| SPDR SP 500 |
| Roundhill Magnificent |
SPDR SP and Roundhill Magnificent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Roundhill Magnificent
The main advantage of trading using opposite SPDR SP and Roundhill Magnificent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Roundhill Magnificent 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 Roundhill Magnificent will offset losses from the drop in Roundhill Magnificent'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 |
| Roundhill Magnificent vs. Invesco DWA Utilities | Roundhill Magnificent vs. Invesco Dynamic Large | Roundhill Magnificent vs. Invesco Dynamic Large | Roundhill Magnificent vs. HUMANA INC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |