Correlation Between Pool and SPY
Can any of the company-specific risk be diversified away by investing in both Pool and SPY 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 Pool and SPY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pool Corporation and SPY Inc, you can compare the effects of market volatilities on Pool and SPY 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 Pool with a short position of SPY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and SPY.
Diversification Opportunities for Pool and SPY
Pay attention - limited upside
The 3 months correlation between Pool and SPY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and SPY Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPY Inc and Pool 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 Pool Corporation are associated (or correlated) with SPY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPY Inc has no effect on the direction of Pool i.e., Pool and SPY go up and down completely randomly.
Pair Corralation between Pool and SPY
If you would invest (100.00) in SPY Inc on January 20, 2024 and sell it today you would earn a total of 100.00 from holding SPY Inc or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Pool Corp. vs. SPY Inc
Performance |
| Timeline |
| Pool |
| SPY Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Pool and SPY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and SPY
The main advantage of trading using opposite Pool and SPY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool position performs unexpectedly, SPY 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 SPY will offset losses from the drop in SPY's long position.The idea behind Pool Corporation and SPY Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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