Correlation Between SPDR SP and Xtrackers Nikkei
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By analyzing existing cross correlation between SPDR SP Technology and Xtrackers Nikkei 225, you can compare the effects of market volatilities on SPDR SP and Xtrackers Nikkei 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 Xtrackers Nikkei. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Xtrackers Nikkei.
Diversification Opportunities for SPDR SP and Xtrackers Nikkei
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and Xtrackers is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Technology and Xtrackers Nikkei 225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Nikkei 225 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 Technology are associated (or correlated) with Xtrackers Nikkei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Nikkei 225 has no effect on the direction of SPDR SP i.e., SPDR SP and Xtrackers Nikkei go up and down completely randomly.
Pair Corralation between SPDR SP and Xtrackers Nikkei
Assuming the 90 days trading horizon SPDR SP Technology is expected to generate 1.18 times more return on investment than Xtrackers Nikkei. However, SPDR SP is 1.18 times more volatile than Xtrackers Nikkei 225. It trades about 0.09 of its potential returns per unit of risk. Xtrackers Nikkei 225 is currently generating about 0.04 per unit of risk. If you would invest 6,677 in SPDR SP Technology on September 3, 2024 and sell it today you would earn a total of 4,787 from holding SPDR SP Technology or generate 71.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SPDR SP Technology vs. Xtrackers Nikkei 225
Performance |
| Timeline |
| SPDR SP Technology |
| Xtrackers Nikkei 225 |
SPDR SP and Xtrackers Nikkei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Xtrackers Nikkei
The main advantage of trading using opposite SPDR SP and Xtrackers Nikkei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Xtrackers Nikkei 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 Xtrackers Nikkei will offset losses from the drop in Xtrackers Nikkei's long position.| SPDR SP vs. UBS Fund Solutions | SPDR SP vs. Xtrackers II | SPDR SP vs. Xtrackers Nikkei 225 | SPDR SP vs. iShares VII PLC |
| Xtrackers Nikkei vs. UBS Fund Solutions | Xtrackers Nikkei vs. Xtrackers II | Xtrackers Nikkei vs. iShares VII PLC | Xtrackers Nikkei vs. SPDR Gold Shares |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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