Correlation Between ZSPY and ASPY
Can any of the company-specific risk be diversified away by investing in both ZSPY and ASPY 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 ZSPY and ASPY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZSPY and ASPY, you can compare the effects of market volatilities on ZSPY and ASPY 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 ZSPY with a short position of ASPY. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZSPY and ASPY.
Diversification Opportunities for ZSPY and ASPY
Very weak diversification
The 3 months correlation between ZSPY and ASPY is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ZSPY and ASPY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPY and ZSPY 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 ZSPY are associated (or correlated) with ASPY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPY has no effect on the direction of ZSPY i.e., ZSPY and ASPY go up and down completely randomly.
Pair Corralation between ZSPY and ASPY
If you would invest 2,671 in ASPY on September 14, 2024 and sell it today you would earn a total of 0.00 from holding ASPY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZSPY vs. ASPY
Performance |
| Timeline |
| ZSPY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ASPY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ZSPY and ASPY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZSPY and ASPY
The main advantage of trading using opposite ZSPY and ASPY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZSPY position performs unexpectedly, ASPY 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 ASPY will offset losses from the drop in ASPY's long position.The idea behind ZSPY and ASPY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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