Correlation Between SPDR SP and SPDR Nuveen
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Nuveen 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 SPDR Nuveen 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 SPDR Nuveen Municipal, you can compare the effects of market volatilities on SPDR SP and SPDR Nuveen 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 SPDR Nuveen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Nuveen.
Diversification Opportunities for SPDR SP and SPDR Nuveen
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SPDR and SPDR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and SPDR Nuveen Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Nuveen Municipal 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 SPDR Nuveen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Nuveen Municipal has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Nuveen go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Nuveen
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 4.25 times more return on investment than SPDR Nuveen. However, SPDR SP is 4.25 times more volatile than SPDR Nuveen Municipal. It trades about 0.11 of its potential returns per unit of risk. SPDR Nuveen Municipal is currently generating about 0.12 per unit of risk. If you would invest 54,367 in SPDR SP 500 on September 13, 2024 and sell it today you would earn a total of 6,296 from holding SPDR SP 500 or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. SPDR Nuveen Municipal
Performance |
| Timeline |
| SPDR SP 500 |
| SPDR Nuveen Municipal |
SPDR SP and SPDR Nuveen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Nuveen
The main advantage of trading using opposite SPDR SP and SPDR Nuveen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Nuveen 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 SPDR Nuveen will offset losses from the drop in SPDR Nuveen'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 |
| SPDR Nuveen vs. BlackRock High Yield | SPDR Nuveen vs. iShares iBonds Dec | SPDR Nuveen vs. iShares Short Maturity | SPDR Nuveen vs. iShares iBonds Dec |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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