Correlation Between SPDR FactSet and Alpha Architect
Can any of the company-specific risk be diversified away by investing in both SPDR FactSet and Alpha Architect 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 FactSet and Alpha Architect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR FactSet Innovative and Alpha Architect International, you can compare the effects of market volatilities on SPDR FactSet and Alpha Architect 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 FactSet with a short position of Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR FactSet and Alpha Architect.
Diversification Opportunities for SPDR FactSet and Alpha Architect
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and Alpha is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SPDR FactSet Innovative and Alpha Architect International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect Inte and SPDR FactSet 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 FactSet Innovative are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect Inte has no effect on the direction of SPDR FactSet i.e., SPDR FactSet and Alpha Architect go up and down completely randomly.
Pair Corralation between SPDR FactSet and Alpha Architect
Given the investment horizon of 90 days SPDR FactSet Innovative is expected to generate 1.52 times more return on investment than Alpha Architect. However, SPDR FactSet is 1.52 times more volatile than Alpha Architect International. It trades about 0.07 of its potential returns per unit of risk. Alpha Architect International is currently generating about 0.04 per unit of risk. If you would invest 12,869 in SPDR FactSet Innovative on September 2, 2024 and sell it today you would earn a total of 5,280 from holding SPDR FactSet Innovative or generate 41.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR FactSet Innovative vs. Alpha Architect International
Performance |
| Timeline |
| SPDR FactSet Innovative |
| Alpha Architect Inte |
SPDR FactSet and Alpha Architect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR FactSet and Alpha Architect
The main advantage of trading using opposite SPDR FactSet and Alpha Architect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FactSet position performs unexpectedly, Alpha Architect 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 Alpha Architect will offset losses from the drop in Alpha Architect's long position.| SPDR FactSet vs. SPDR SP Software | SPDR FactSet vs. SPDR Morgan Stanley | SPDR FactSet vs. SPDR SP Health |
| Alpha Architect vs. Alpha Architect Quantitative | Alpha Architect vs. Alpha Architect International | Alpha Architect vs. Alpha Architect Quantitative | Alpha Architect vs. Alpha Architect Value |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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