Correlation Between SPDR SP and 2023 ETF
Can any of the company-specific risk be diversified away by investing in both SPDR SP and 2023 ETF 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 2023 ETF 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 The 2023 ETF, you can compare the effects of market volatilities on SPDR SP and 2023 ETF 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 2023 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and 2023 ETF.
Diversification Opportunities for SPDR SP and 2023 ETF
Very poor diversification
The 3 months correlation between SPDR and 2023 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and The 2023 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 ETF 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 2023 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 ETF has no effect on the direction of SPDR SP i.e., SPDR SP and 2023 ETF go up and down completely randomly.
Pair Corralation between SPDR SP and 2023 ETF
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.04 times more return on investment than 2023 ETF. However, SPDR SP is 1.04 times more volatile than The 2023 ETF. It trades about 0.13 of its potential returns per unit of risk. The 2023 ETF is currently generating about 0.1 per unit of risk. If you would invest 50,244 in SPDR SP 500 on September 1, 2024 and sell it today you would earn a total of 10,011 from holding SPDR SP 500 or generate 19.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
SPDR SP 500 vs. The 2023 ETF
Performance |
| Timeline |
| SPDR SP 500 |
| 2023 ETF |
SPDR SP and 2023 ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and 2023 ETF
The main advantage of trading using opposite SPDR SP and 2023 ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, 2023 ETF 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 2023 ETF will offset losses from the drop in 2023 ETF's long position.| SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class |
| 2023 ETF vs. Vanguard Total Stock | 2023 ETF vs. SPDR SP 500 | 2023 ETF vs. iShares Core SP | 2023 ETF vs. Vanguard Dividend Appreciation |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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