Correlation Between SPDR Portfolio and SP Funds
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and SP Funds 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 SP Funds 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 SP Funds SP, you can compare the effects of market volatilities on SPDR Portfolio and SP Funds 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 SP Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and SP Funds.
Diversification Opportunities for SPDR Portfolio and SP Funds
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and SPUS is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and SP Funds SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Funds SP 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 SP Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Funds SP has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and SP Funds go up and down completely randomly.
Pair Corralation between SPDR Portfolio and SP Funds
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 1.09 times more return on investment than SP Funds. However, SPDR Portfolio is 1.09 times more volatile than SP Funds SP. It trades about 0.09 of its potential returns per unit of risk. SP Funds SP is currently generating about 0.05 per unit of risk. If you would invest 8,448 in SPDR Portfolio SP on August 26, 2024 and sell it today you would earn a total of 182.00 from holding SPDR Portfolio SP or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. SP Funds SP
Performance |
| Timeline |
| SPDR Portfolio SP |
| SP Funds SP |
SPDR Portfolio and SP Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and SP Funds
The main advantage of trading using opposite SPDR Portfolio and SP Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, SP Funds 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 SP Funds will offset losses from the drop in SP Funds' long position.| SPDR Portfolio vs. FT Vest Equity | SPDR Portfolio vs. Northern Lights | SPDR Portfolio vs. Dimensional International High | SPDR Portfolio vs. First Trust Exchange Traded |
| SP Funds vs. Invesco Dynamic Large | SP Funds vs. Perella Weinberg Partners | SP Funds vs. HUMANA INC | SP Funds vs. Aquagold International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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