Correlation Between SPDR SP and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Consumer Staples 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 Consumer Staples 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 Consumer Staples Select, you can compare the effects of market volatilities on SPDR SP and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Consumer Staples.
Diversification Opportunities for SPDR SP and Consumer Staples
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Consumer is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and Consumer Staples Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Select 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Select has no effect on the direction of SPDR SP i.e., SPDR SP and Consumer Staples go up and down completely randomly.
Pair Corralation between SPDR SP and Consumer Staples
Considering the 90-day investment horizon SPDR SP Oil is expected to generate 2.28 times more return on investment than Consumer Staples. However, SPDR SP is 2.28 times more volatile than Consumer Staples Select. It trades about 0.3 of its potential returns per unit of risk. Consumer Staples Select is currently generating about 0.09 per unit of risk. If you would invest 13,257 in SPDR SP Oil on August 28, 2024 and sell it today you would earn a total of 1,347 from holding SPDR SP Oil or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Oil vs. Consumer Staples Select
Performance |
| Timeline |
| SPDR SP Oil |
| Consumer Staples Select |
SPDR SP and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Consumer Staples
The main advantage of trading using opposite SPDR SP and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' 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 |
| Consumer Staples vs. Vanguard Consumer Discretionary | Consumer Staples vs. Vanguard Utilities Index | Consumer Staples vs. Vanguard Industrials Index | Consumer Staples vs. Vanguard Materials Index |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |