Correlation Between SPDR SP and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SPDR Kensho 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 Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Oil and SPDR Kensho Clean, you can compare the effects of market volatilities on SPDR SP and SPDR Kensho 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 Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR Kensho.
Diversification Opportunities for SPDR SP and SPDR Kensho
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and SPDR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and SPDR Kensho Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Clean 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 Oil are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Clean has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR Kensho go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR Kensho
Considering the 90-day investment horizon SPDR SP Oil is expected to generate 0.95 times more return on investment than SPDR Kensho. However, SPDR SP Oil is 1.05 times less risky than SPDR Kensho. It trades about 0.03 of its potential returns per unit of risk. SPDR Kensho Clean is currently generating about -0.03 per unit of risk. If you would invest 7,201 in SPDR SP Oil on September 2, 2024 and sell it today you would earn a total of 1,377 from holding SPDR SP Oil or generate 19.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Oil vs. SPDR Kensho Clean
Performance |
| Timeline |
| SPDR SP Oil |
| SPDR Kensho Clean |
SPDR SP and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SPDR Kensho
The main advantage of trading using opposite SPDR SP and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SPDR Kensho 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 Kensho will offset losses from the drop in SPDR Kensho's long position.The idea behind SPDR SP Oil and SPDR Kensho Clean pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SPDR Kensho vs. ALPS Clean Energy | SPDR Kensho vs. VanEck Low Carbon | SPDR Kensho vs. Invesco Global Clean | SPDR Kensho vs. SPDR Kensho New |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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