Correlation Between SPDR SP and US Global
Can any of the company-specific risk be diversified away by investing in both SPDR SP and US Global 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 US Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Dividend and US Global Sea, you can compare the effects of market volatilities on SPDR SP and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and US Global.
Diversification Opportunities for SPDR SP and US Global
Very good diversification
The 3 months correlation between SPDR and SEA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Dividend and US Global Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Sea 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 Dividend are associated (or correlated) with US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Sea has no effect on the direction of SPDR SP i.e., SPDR SP and US Global go up and down completely randomly.
Pair Corralation between SPDR SP and US Global
Considering the 90-day investment horizon SPDR SP is expected to generate 18.2 times less return on investment than US Global. But when comparing it to its historical volatility, SPDR SP Dividend is 1.18 times less risky than US Global. It trades about 0.01 of its potential returns per unit of risk. US Global Sea is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,484 in US Global Sea on January 26, 2024 and sell it today you would earn a total of 60.50 from holding US Global Sea or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPDR SP Dividend vs. US Global Sea
Performance |
| Timeline |
| SPDR SP Dividend |
| US Global Sea |
SPDR SP and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and US Global
The main advantage of trading using opposite SPDR SP and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.| SPDR SP vs. iShares Select Dividend | SPDR SP vs. Vanguard Dividend Appreciation | SPDR SP vs. Vanguard High Dividend | SPDR SP vs. ProShares SP 500 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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