Correlation Between SPDR SP and Roundhill ETF
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Roundhill 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 Roundhill 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 Roundhill ETF Trust, you can compare the effects of market volatilities on SPDR SP and Roundhill 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 Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Roundhill ETF.
Diversification Opportunities for SPDR SP and Roundhill ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Roundhill is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill ETF Trust 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 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of SPDR SP i.e., SPDR SP and Roundhill ETF go up and down completely randomly.
Pair Corralation between SPDR SP and Roundhill ETF
Considering the 90-day investment horizon SPDR SP is expected to generate 1.06 times less return on investment than Roundhill ETF. In addition to that, SPDR SP is 1.08 times more volatile than Roundhill ETF Trust. It trades about 0.14 of its total potential returns per unit of risk. Roundhill ETF Trust is currently generating about 0.16 per unit of volatility. If you would invest 4,570 in Roundhill ETF Trust on September 1, 2024 and sell it today you would earn a total of 736.00 from holding Roundhill ETF Trust or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
SPDR SP 500 vs. Roundhill ETF Trust
Performance |
| Timeline |
| SPDR SP 500 |
| Roundhill ETF Trust |
SPDR SP and Roundhill ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Roundhill ETF
The main advantage of trading using opposite SPDR SP and Roundhill ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Roundhill 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 Roundhill ETF will offset losses from the drop in Roundhill 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 |
| Roundhill ETF vs. Vanguard Total Stock | Roundhill ETF vs. SPDR SP 500 | Roundhill ETF vs. iShares Core SP | Roundhill 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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