Correlation Between SPDR SP and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Dividend and SPDR Dow Jones, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Dow.
Diversification Opportunities for SPDR SP and SPDR Dow
Very good diversification
The 3 months correlation between SPDR and SPDR is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Dividend 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 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 Dividend 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 SPDR SP i.e., SPDR SP and SPDR Dow go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Dow
Assuming the 90 days trading horizon SPDR SP Dividend is expected to generate 0.99 times more return on investment than SPDR Dow. However, SPDR SP Dividend is 1.01 times less risky than SPDR Dow. It trades about 0.29 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about -0.01 per unit of risk. If you would invest 5,963 in SPDR SP Dividend on August 28, 2024 and sell it today you would earn a total of 337.00 from holding SPDR SP Dividend or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Dividend vs. SPDR Dow Jones
Performance |
| Timeline |
| SPDR SP Dividend |
| SPDR Dow Jones |
SPDR SP and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Dow
The main advantage of trading using opposite SPDR SP and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. Leverage Shares 3x | SPDR SP vs. WisdomTree SP 500 | SPDR SP vs. WisdomTree Silver 3x | SPDR SP vs. Leverage Shares 3x |
| SPDR Dow vs. Vanguard FTSE Developed | SPDR Dow vs. Leverage Shares 2x | SPDR Dow vs. Amundi Index Solutions | SPDR Dow vs. Amundi Index Solutions |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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