Correlation Between Technology Select and SPDR Morgan
Can any of the company-specific risk be diversified away by investing in both Technology Select and SPDR Morgan 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 Morgan 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 Morgan Stanley, you can compare the effects of market volatilities on Technology Select and SPDR Morgan 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 Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and SPDR Morgan.
Diversification Opportunities for Technology Select and SPDR Morgan
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Technology and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and SPDR Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Morgan Stanley 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 Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Morgan Stanley has no effect on the direction of Technology Select i.e., Technology Select and SPDR Morgan go up and down completely randomly.
Pair Corralation between Technology Select and SPDR Morgan
Considering the 90-day investment horizon Technology Select Sector is expected to under-perform the SPDR Morgan. In addition to that, Technology Select is 1.12 times more volatile than SPDR Morgan Stanley. It trades about -0.02 of its total potential returns per unit of risk. SPDR Morgan Stanley is currently generating about 0.03 per unit of volatility. If you would invest 20,249 in SPDR Morgan Stanley on August 30, 2024 and sell it today you would earn a total of 135.00 from holding SPDR Morgan Stanley or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Technology Select Sector vs. SPDR Morgan Stanley
Performance |
| Timeline |
| Technology Select Sector |
| SPDR Morgan Stanley |
Technology Select and SPDR Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and SPDR Morgan
The main advantage of trading using opposite Technology Select and SPDR Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, SPDR Morgan 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 Morgan will offset losses from the drop in SPDR Morgan's long position.| Technology Select vs. First Trust Exchange Traded | Technology Select vs. Ultimus Managers Trust | Technology Select vs. Horizon Kinetics Medical | Technology Select vs. Harbor Health Care |
| SPDR Morgan vs. SPDR FactSet Innovative | SPDR Morgan vs. SPDR SP Software | SPDR Morgan vs. SPDR SP Health | SPDR Morgan vs. iShares Expanded Tech |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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