Correlation Between SPDR SP and Vesper Large
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Vesper Large 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 Vesper Large 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 Vesper Large Cap, you can compare the effects of market volatilities on SPDR SP and Vesper Large 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 Vesper Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Vesper Large.
Diversification Opportunities for SPDR SP and Vesper Large
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Vesper is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Vesper Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vesper Large Cap 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 Vesper Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vesper Large Cap has no effect on the direction of SPDR SP i.e., SPDR SP and Vesper Large go up and down completely randomly.
Pair Corralation between SPDR SP and Vesper Large
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.09 times more return on investment than Vesper Large. However, SPDR SP is 1.09 times more volatile than Vesper Large Cap. It trades about 0.38 of its potential returns per unit of risk. Vesper Large Cap is currently generating about 0.4 per unit of risk. If you would invest 56,864 in SPDR SP 500 on September 1, 2024 and sell it today you would earn a total of 3,391 from holding SPDR SP 500 or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR SP 500 vs. Vesper Large Cap
Performance |
| Timeline |
| SPDR SP 500 |
| Vesper Large Cap |
SPDR SP and Vesper Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Vesper Large
The main advantage of trading using opposite SPDR SP and Vesper Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Vesper Large 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 Vesper Large will offset losses from the drop in Vesper Large'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 |
| Vesper Large vs. Vanguard Total Stock | Vesper Large vs. SPDR SP 500 | Vesper Large vs. iShares Core SP | Vesper Large 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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