Correlation Between SPDR SP and Smith Nephew
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Smith Nephew 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 Smith Nephew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Retail and Smith Nephew SNATS, you can compare the effects of market volatilities on SPDR SP and Smith Nephew 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 Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Smith Nephew.
Diversification Opportunities for SPDR SP and Smith Nephew
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Smith is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Retail and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS 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 Retail are associated (or correlated) with Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of SPDR SP i.e., SPDR SP and Smith Nephew go up and down completely randomly.
Pair Corralation between SPDR SP and Smith Nephew
Considering the 90-day investment horizon SPDR SP Retail is expected to generate 0.79 times more return on investment than Smith Nephew. However, SPDR SP Retail is 1.26 times less risky than Smith Nephew. It trades about 0.07 of its potential returns per unit of risk. Smith Nephew SNATS is currently generating about 0.01 per unit of risk. If you would invest 6,730 in SPDR SP Retail on September 4, 2024 and sell it today you would earn a total of 1,595 from holding SPDR SP Retail or generate 23.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Retail vs. Smith Nephew SNATS
Performance |
| Timeline |
| SPDR SP Retail |
| Smith Nephew SNATS |
SPDR SP and Smith Nephew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Smith Nephew
The main advantage of trading using opposite SPDR SP and Smith Nephew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Smith Nephew 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 Smith Nephew will offset losses from the drop in Smith Nephew's long position.| SPDR SP vs. Smith Nephew SNATS | SPDR SP vs. Fresenius Medical Care | SPDR SP vs. Fomento Economico Mexicano | SPDR SP vs. The Cooper Companies, |
| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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