Correlation Between Technology Select and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Technology Select and SPDR Galaxy 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 Technology Select and SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and SPDR Galaxy Transformative, you can compare the effects of market volatilities on Technology Select and SPDR Galaxy 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 Technology Select with a short position of SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and SPDR Galaxy.
Diversification Opportunities for Technology Select and SPDR Galaxy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Technology and SPDR is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and SPDR Galaxy Transformative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Transfor and Technology 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 Technology Select Sector are associated (or correlated) with SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Transfor has no effect on the direction of Technology Select i.e., Technology Select and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Technology Select and SPDR Galaxy
Considering the 90-day investment horizon Technology Select Sector is expected to generate 0.44 times more return on investment than SPDR Galaxy. However, Technology Select Sector is 2.26 times less risky than SPDR Galaxy. It trades about -0.08 of its potential returns per unit of risk. SPDR Galaxy Transformative is currently generating about -0.12 per unit of risk. If you would invest 24,045 in Technology Select Sector on December 6, 2024 and sell it today you would lose (1,888) from holding Technology Select Sector or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Technology Select Sector vs. SPDR Galaxy Transformative
Performance |
| Timeline |
| Technology Select Sector |
| SPDR Galaxy Transfor |
Technology Select and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and SPDR Galaxy
The main advantage of trading using opposite Technology Select and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, SPDR Galaxy 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 Galaxy will offset losses from the drop in SPDR Galaxy's long position.| Technology Select vs. Fidelity MSCI Information | Technology Select vs. FT Vest Equity | Technology Select vs. Zillow Group Class | Technology Select vs. Northern Lights |
| SPDR Galaxy vs. Strategy Shares | SPDR Galaxy vs. Freedom Day Dividend | SPDR Galaxy vs. Franklin Templeton ETF | SPDR Galaxy vs. iShares MSCI China |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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