Correlation Between Financial Select and SPDR Nuveen
Can any of the company-specific risk be diversified away by investing in both Financial Select and SPDR Nuveen 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 Financial Select and SPDR Nuveen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Select Sector and SPDR Nuveen Bloomberg, you can compare the effects of market volatilities on Financial Select and SPDR Nuveen 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 Financial Select with a short position of SPDR Nuveen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Select and SPDR Nuveen.
Diversification Opportunities for Financial Select and SPDR Nuveen
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Financial and SPDR is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Financial Select Sector and SPDR Nuveen Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Nuveen Bloomberg and Financial Select 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 Financial Select Sector are associated (or correlated) with SPDR Nuveen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Nuveen Bloomberg has no effect on the direction of Financial Select i.e., Financial Select and SPDR Nuveen go up and down completely randomly.
Pair Corralation between Financial Select and SPDR Nuveen
Considering the 90-day investment horizon Financial Select Sector is expected to generate 9.41 times more return on investment than SPDR Nuveen. However, Financial Select is 9.41 times more volatile than SPDR Nuveen Bloomberg. It trades about 0.26 of its potential returns per unit of risk. SPDR Nuveen Bloomberg is currently generating about 0.11 per unit of risk. If you would invest 4,713 in Financial Select Sector on August 31, 2024 and sell it today you would earn a total of 413.00 from holding Financial Select Sector or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Select Sector vs. SPDR Nuveen Bloomberg
Performance |
| Timeline |
| Financial Select Sector |
| SPDR Nuveen Bloomberg |
Financial Select and SPDR Nuveen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Select and SPDR Nuveen
The main advantage of trading using opposite Financial Select and SPDR Nuveen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Select position performs unexpectedly, SPDR Nuveen 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 Nuveen will offset losses from the drop in SPDR Nuveen's long position.| Financial Select vs. Energy Select Sector | Financial Select vs. Technology Select Sector | Financial Select vs. Health Care Select | Financial Select vs. Industrial Select Sector |
| SPDR Nuveen vs. SPDR Nuveen Bloomberg | SPDR Nuveen vs. VanEck Intermediate Muni | SPDR Nuveen vs. Invesco National AMT Free | SPDR Nuveen vs. VanEck Short Muni |
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 Stocks Directory module to find actively traded stocks across global markets.
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