Correlation Between SPDR SP and American Century
Can any of the company-specific risk be diversified away by investing in both SPDR SP and American Century 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 SP and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Oil and American Century ETF, you can compare the effects of market volatilities on SPDR SP and American Century 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 SP with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and American Century.
Diversification Opportunities for SPDR SP and American Century
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and American is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF and SPDR SP 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 SP Oil are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of SPDR SP i.e., SPDR SP and American Century go up and down completely randomly.
Pair Corralation between SPDR SP and American Century
Considering the 90-day investment horizon SPDR SP Oil is expected to generate 3.22 times more return on investment than American Century. However, SPDR SP is 3.22 times more volatile than American Century ETF. It trades about 0.38 of its potential returns per unit of risk. American Century ETF is currently generating about 0.42 per unit of risk. If you would invest 12,934 in SPDR SP Oil on September 2, 2024 and sell it today you would earn a total of 1,614 from holding SPDR SP Oil or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Oil vs. American Century ETF
Performance |
| Timeline |
| SPDR SP Oil |
| American Century ETF |
SPDR SP and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and American Century
The main advantage of trading using opposite SPDR SP and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| SPDR SP vs. VanEck Oil Services | SPDR SP vs. SPDR SP Metals | SPDR SP vs. Energy Select Sector | SPDR SP vs. SPDR SP Retail |
| American Century vs. iShares Core SP | American Century vs. iShares Core MSCI | American Century vs. iShares Broad USD | American Century vs. iShares Core SP |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |