Correlation Between X Square and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both X Square and SPDR Dow 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 X Square and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Square Balanced and SPDR Dow Jones, you can compare the effects of market volatilities on X Square and SPDR Dow 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 X Square with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Square and SPDR Dow.
Diversification Opportunities for X Square and SPDR Dow
Almost no diversification
The 3 months correlation between SQBIX and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding X Square Balanced and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and X Square 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 X Square Balanced are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of X Square i.e., X Square and SPDR Dow go up and down completely randomly.
Pair Corralation between X Square and SPDR Dow
Assuming the 90 days horizon X Square is expected to generate 1.18 times less return on investment than SPDR Dow. But when comparing it to its historical volatility, X Square Balanced is 1.6 times less risky than SPDR Dow. It trades about 0.34 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 42,088 in SPDR Dow Jones on August 26, 2024 and sell it today you would earn a total of 2,228 from holding SPDR Dow Jones or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Square Balanced vs. SPDR Dow Jones
Performance |
| Timeline |
| X Square Balanced |
| SPDR Dow Jones |
X Square and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Square and SPDR Dow
The main advantage of trading using opposite X Square and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Square position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.| X Square vs. X Square Balanced | X Square vs. Vanguard SP Mid Cap | X Square vs. SPDR Dow Jones | X Square vs. Energy Select Sector |
| SPDR Dow vs. BlackRock ETF Trust | SPDR Dow vs. Rbb Fund | SPDR Dow vs. Virtus ETF Trust | SPDR Dow vs. Amplify CWP Enhanced |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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