Correlation Between SPDR SP and NuShares Enhanced
Can any of the company-specific risk be diversified away by investing in both SPDR SP and NuShares Enhanced 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 NuShares Enhanced 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 NuShares Enhanced Yield, you can compare the effects of market volatilities on SPDR SP and NuShares Enhanced 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 NuShares Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and NuShares Enhanced.
Diversification Opportunities for SPDR SP and NuShares Enhanced
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and NuShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and NuShares Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares Enhanced Yield 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 NuShares Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares Enhanced Yield has no effect on the direction of SPDR SP i.e., SPDR SP and NuShares Enhanced go up and down completely randomly.
Pair Corralation between SPDR SP and NuShares Enhanced
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 2.86 times more return on investment than NuShares Enhanced. However, SPDR SP is 2.86 times more volatile than NuShares Enhanced Yield. It trades about 0.15 of its potential returns per unit of risk. NuShares Enhanced Yield is currently generating about -0.05 per unit of risk. If you would invest 57,904 in SPDR SP 500 on August 26, 2024 and sell it today you would earn a total of 1,647 from holding SPDR SP 500 or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. NuShares Enhanced Yield
Performance |
| Timeline |
| SPDR SP 500 |
| NuShares Enhanced Yield |
SPDR SP and NuShares Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and NuShares Enhanced
The main advantage of trading using opposite SPDR SP and NuShares Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, NuShares Enhanced 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 NuShares Enhanced will offset losses from the drop in NuShares Enhanced'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 |
| NuShares Enhanced vs. Nuveen Enhanced Yield | NuShares Enhanced vs. Nuveen ESG Aggregate | NuShares Enhanced vs. Virtus Newfleet Multi Sector | NuShares Enhanced 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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