Correlation Between SPDR SP and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both SPDR SP and High-yield Municipal 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 High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Health and High Yield Municipal Fund, you can compare the effects of market volatilities on SPDR SP and High-yield Municipal 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 High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and High-yield Municipal.
Diversification Opportunities for SPDR SP and High-yield Municipal
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and High-yield is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Health and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal 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 Health are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of SPDR SP i.e., SPDR SP and High-yield Municipal go up and down completely randomly.
Pair Corralation between SPDR SP and High-yield Municipal
Considering the 90-day investment horizon SPDR SP Health is expected to generate 3.05 times more return on investment than High-yield Municipal. However, SPDR SP is 3.05 times more volatile than High Yield Municipal Fund. It trades about 0.25 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.1 per unit of risk. If you would invest 8,766 in SPDR SP Health on August 27, 2024 and sell it today you would earn a total of 548.00 from holding SPDR SP Health or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Health vs. High Yield Municipal Fund
Performance |
| Timeline |
| SPDR SP Health |
| High Yield Municipal |
SPDR SP and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and High-yield Municipal
The main advantage of trading using opposite SPDR SP and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, High-yield Municipal 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Software | SPDR SP vs. Invesco SP SmallCap | SPDR SP vs. SPDR SP Pharmaceuticals |
| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |