Correlation Between SPDR SP and ProShares Online
Can any of the company-specific risk be diversified away by investing in both SPDR SP and ProShares Online 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 ProShares Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Homebuilders and ProShares Online Retail, you can compare the effects of market volatilities on SPDR SP and ProShares Online 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 ProShares Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and ProShares Online.
Diversification Opportunities for SPDR SP and ProShares Online
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and ProShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Homebuilders and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail 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 Homebuilders are associated (or correlated) with ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of SPDR SP i.e., SPDR SP and ProShares Online go up and down completely randomly.
Pair Corralation between SPDR SP and ProShares Online
Considering the 90-day investment horizon SPDR SP Homebuilders is expected to generate 1.21 times more return on investment than ProShares Online. However, SPDR SP is 1.21 times more volatile than ProShares Online Retail. It trades about 0.24 of its potential returns per unit of risk. ProShares Online Retail is currently generating about 0.23 per unit of risk. If you would invest 11,460 in SPDR SP Homebuilders on September 2, 2024 and sell it today you would earn a total of 829.00 from holding SPDR SP Homebuilders or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Homebuilders vs. ProShares Online Retail
Performance |
| Timeline |
| SPDR SP Homebuilders |
| ProShares Online Retail |
SPDR SP and ProShares Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and ProShares Online
The main advantage of trading using opposite SPDR SP and ProShares Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, ProShares Online 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 ProShares Online will offset losses from the drop in ProShares Online's long position.| SPDR SP vs. iShares Home Construction | SPDR SP vs. SPDR SP Retail | SPDR SP vs. Materials Select Sector | SPDR SP vs. Industrial Select Sector |
| ProShares Online vs. Amplify Online Retail | ProShares Online vs. ProShares Long OnlineShort | ProShares Online vs. Global X E commerce | ProShares Online vs. WisdomTree Cloud Computing |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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