Correlation Between SPDR Portfolio and Global X
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Global X 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 Portfolio and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and Global X Short Term, you can compare the effects of market volatilities on SPDR Portfolio and Global X 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 Portfolio with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Global X.
Diversification Opportunities for SPDR Portfolio and Global X
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Global is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Global X Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Short and SPDR Portfolio 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 Portfolio SP are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Short has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Global X go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Global X
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 14.53 times more return on investment than Global X. However, SPDR Portfolio is 14.53 times more volatile than Global X Short Term. It trades about 0.11 of its potential returns per unit of risk. Global X Short Term is currently generating about -0.03 per unit of risk. If you would invest 5,214 in SPDR Portfolio SP on August 29, 2024 and sell it today you would earn a total of 3,444 from holding SPDR Portfolio SP or generate 66.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 11.49% |
Values | Daily Returns |
SPDR Portfolio SP vs. Global X Short Term
Performance |
Timeline |
SPDR Portfolio SP |
Global X Short |
SPDR Portfolio and Global X Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Portfolio and Global X
The main advantage of trading using opposite SPDR Portfolio and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.SPDR Portfolio vs. iShares Russell 1000 | SPDR Portfolio vs. iShares Russell Top | SPDR Portfolio vs. Vanguard Mega Cap | SPDR Portfolio vs. Invesco QQQ Trust |
Global X vs. Global X Funds | Global X vs. US Treasury 12 | Global X vs. Tidal Trust II | Global X vs. Franklin Liberty Treasury |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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