Correlation Between Bombardier and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Bombardier and SPDR SP 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 Bombardier and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombardier and SPDR SP Dividend, you can compare the effects of market volatilities on Bombardier and SPDR SP 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 Bombardier with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombardier and SPDR SP.
Diversification Opportunities for Bombardier and SPDR SP
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bombardier and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bombardier and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend and Bombardier 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 Bombardier are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Dividend has no effect on the direction of Bombardier i.e., Bombardier and SPDR SP go up and down completely randomly.
Pair Corralation between Bombardier and SPDR SP
Assuming the 90 days trading horizon Bombardier is expected to generate 1.07 times less return on investment than SPDR SP. In addition to that, Bombardier is 3.95 times more volatile than SPDR SP Dividend. It trades about 0.01 of its total potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.03 per unit of volatility. If you would invest 12,164 in SPDR SP Dividend on January 26, 2024 and sell it today you would earn a total of 681.00 from holding SPDR SP Dividend or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bombardier vs. SPDR SP Dividend
Performance |
| Timeline |
| Bombardier |
| SPDR SP Dividend |
Bombardier and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bombardier and SPDR SP
The main advantage of trading using opposite Bombardier and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombardier position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Bombardier vs. BlackBerry | Bombardier vs. Air Canada | Bombardier vs. Suncor Energy | Bombardier vs. Manulife Financial Corp |
| SPDR SP vs. SPDR Russell 1000 | SPDR SP vs. SPDR MSCI USA | SPDR SP vs. SPDR MSCI EAFE | SPDR SP vs. SPDR SSGA Large |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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