Correlation Between SPDR Portfolio and Absolute Core
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Absolute Core 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 Absolute Core 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 Absolute Core Strategy, you can compare the effects of market volatilities on SPDR Portfolio and Absolute Core 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 Absolute Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Absolute Core.
Diversification Opportunities for SPDR Portfolio and Absolute Core
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Absolute is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Absolute Core Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Core Strategy 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 Absolute Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Core Strategy has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Absolute Core go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Absolute Core
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 1.22 times more return on investment than Absolute Core. However, SPDR Portfolio is 1.22 times more volatile than Absolute Core Strategy. It trades about 0.09 of its potential returns per unit of risk. Absolute Core Strategy is currently generating about 0.08 per unit of risk. If you would invest 3,914 in SPDR Portfolio SP on November 28, 2024 and sell it today you would earn a total of 1,324 from holding SPDR Portfolio SP or generate 33.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. Absolute Core Strategy
Performance |
| Timeline |
| SPDR Portfolio SP |
| Absolute Core Strategy |
SPDR Portfolio and Absolute Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Absolute Core
The main advantage of trading using opposite SPDR Portfolio and Absolute Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Absolute Core 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 Absolute Core will offset losses from the drop in Absolute Core's long position.| SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR SP 600 |
| Absolute Core vs. Anfield Equity Sector | Absolute Core vs. AdvisorShares Dorsey Wright | Absolute Core vs. First Trust Active | Absolute Core vs. Aptus Collared Income |
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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