Correlation Between Affinity World and SPDR Global
Can any of the company-specific risk be diversified away by investing in both Affinity World and SPDR Global 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 Affinity World and SPDR Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity World Leaders and SPDR Global Dow, you can compare the effects of market volatilities on Affinity World and SPDR Global 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 Affinity World with a short position of SPDR Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity World and SPDR Global.
Diversification Opportunities for Affinity World and SPDR Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Affinity and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Affinity World Leaders and SPDR Global Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Global Dow and Affinity World 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 Affinity World Leaders are associated (or correlated) with SPDR Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Global Dow has no effect on the direction of Affinity World i.e., Affinity World and SPDR Global go up and down completely randomly.
Pair Corralation between Affinity World and SPDR Global
Given the investment horizon of 90 days Affinity World Leaders is expected to generate 1.12 times more return on investment than SPDR Global. However, Affinity World is 1.12 times more volatile than SPDR Global Dow. It trades about 0.1 of its potential returns per unit of risk. SPDR Global Dow is currently generating about 0.09 per unit of risk. If you would invest 2,303 in Affinity World Leaders on August 26, 2024 and sell it today you would earn a total of 1,169 from holding Affinity World Leaders or generate 50.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affinity World Leaders vs. SPDR Global Dow
Performance |
| Timeline |
| Affinity World Leaders |
| SPDR Global Dow |
Affinity World and SPDR Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affinity World and SPDR Global
The main advantage of trading using opposite Affinity World and SPDR Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity World position performs unexpectedly, SPDR Global 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 Global will offset losses from the drop in SPDR Global's long position.| Affinity World vs. Simplify Interest Rate | Affinity World vs. WisdomTree Global High | Affinity World vs. JP Morgan Exchange Traded |
| SPDR Global vs. Simplify Interest Rate | SPDR Global vs. WisdomTree Global High | SPDR Global vs. JP Morgan Exchange Traded |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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