Correlation Between SPDR SP and Exchange Traded
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Exchange Traded 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 Exchange Traded 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 Exchange Traded Concepts, you can compare the effects of market volatilities on SPDR SP and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Exchange Traded.
Diversification Opportunities for SPDR SP and Exchange Traded
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Exchange is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of SPDR SP i.e., SPDR SP and Exchange Traded go up and down completely randomly.
Pair Corralation between SPDR SP and Exchange Traded
Considering the 90-day investment horizon SPDR SP is expected to generate 2.16 times less return on investment than Exchange Traded. In addition to that, SPDR SP is 1.27 times more volatile than Exchange Traded Concepts. It trades about 0.02 of its total potential returns per unit of risk. Exchange Traded Concepts is currently generating about 0.06 per unit of volatility. If you would invest 2,501 in Exchange Traded Concepts on August 26, 2024 and sell it today you would earn a total of 385.00 from holding Exchange Traded Concepts or generate 15.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 43.26% |
| Values | Daily Returns |
SPDR SP Oil vs. Exchange Traded Concepts
Performance |
| Timeline |
| SPDR SP Oil |
| Exchange Traded Concepts |
SPDR SP and Exchange Traded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Exchange Traded
The main advantage of trading using opposite SPDR SP and Exchange Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Exchange Traded 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 Exchange Traded will offset losses from the drop in Exchange Traded'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 |
| Exchange Traded vs. EA Series Trust | Exchange Traded vs. EA Series Trust | Exchange Traded vs. Rumble Inc | Exchange Traded vs. EA Series Trust |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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