Correlation Between SPDR Kensho and IPath Series
Can any of the company-specific risk be diversified away by investing in both SPDR Kensho and IPath Series 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 Kensho and IPath Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Kensho Future and iPath Series B, you can compare the effects of market volatilities on SPDR Kensho and IPath Series 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 Kensho with a short position of IPath Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and IPath Series.
Diversification Opportunities for SPDR Kensho and IPath Series
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and IPath is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho Future and iPath Series B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPath Series B and SPDR Kensho 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 Kensho Future are associated (or correlated) with IPath Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPath Series B has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and IPath Series go up and down completely randomly.
Pair Corralation between SPDR Kensho and IPath Series
Given the investment horizon of 90 days SPDR Kensho Future is expected to generate 0.77 times more return on investment than IPath Series. However, SPDR Kensho Future is 1.29 times less risky than IPath Series. It trades about 0.16 of its potential returns per unit of risk. iPath Series B is currently generating about -0.04 per unit of risk. If you would invest 6,710 in SPDR Kensho Future on November 2, 2024 and sell it today you would earn a total of 261.00 from holding SPDR Kensho Future or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Kensho Future vs. iPath Series B
Performance |
| Timeline |
| SPDR Kensho Future |
| iPath Series B |
SPDR Kensho and IPath Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Kensho and IPath Series
The main advantage of trading using opposite SPDR Kensho and IPath Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho position performs unexpectedly, IPath Series 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 IPath Series will offset losses from the drop in IPath Series' long position.| SPDR Kensho vs. SPDR STOXX Europe | SPDR Kensho vs. SPDR Bloomberg Barclays | SPDR Kensho vs. SPDR Kensho Intelligent | SPDR Kensho vs. SPDR SP Kensho |
| IPath Series vs. ProShares VIX Mid Term | IPath Series vs. ProShares VIX Short Term | IPath Series vs. iPath Series B | IPath Series vs. ProShares Short VIX |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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