Correlation Between Consumer Staples and SPDR DoubleLine
Can any of the company-specific risk be diversified away by investing in both Consumer Staples and SPDR DoubleLine 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 Consumer Staples and SPDR DoubleLine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Select and SPDR DoubleLine Short, you can compare the effects of market volatilities on Consumer Staples and SPDR DoubleLine 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 Consumer Staples with a short position of SPDR DoubleLine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and SPDR DoubleLine.
Diversification Opportunities for Consumer Staples and SPDR DoubleLine
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Consumer and SPDR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Select and SPDR DoubleLine Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR DoubleLine Short and Consumer Staples 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 Consumer Staples Select are associated (or correlated) with SPDR DoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR DoubleLine Short has no effect on the direction of Consumer Staples i.e., Consumer Staples and SPDR DoubleLine go up and down completely randomly.
Pair Corralation between Consumer Staples and SPDR DoubleLine
Considering the 90-day investment horizon Consumer Staples Select is expected to generate 7.0 times more return on investment than SPDR DoubleLine. However, Consumer Staples is 7.0 times more volatile than SPDR DoubleLine Short. It trades about 0.05 of its potential returns per unit of risk. SPDR DoubleLine Short is currently generating about -0.1 per unit of risk. If you would invest 7,547 in Consumer Staples Select on January 26, 2024 and sell it today you would earn a total of 46.00 from holding Consumer Staples Select or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Consumer Staples Select vs. SPDR DoubleLine Short
Performance |
| Timeline |
| Consumer Staples Select |
| SPDR DoubleLine Short |
Consumer Staples and SPDR DoubleLine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Staples and SPDR DoubleLine
The main advantage of trading using opposite Consumer Staples and SPDR DoubleLine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples position performs unexpectedly, SPDR DoubleLine 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 DoubleLine will offset losses from the drop in SPDR DoubleLine's long position.| Consumer Staples vs. Fidelity MSCI Utilities | Consumer Staples vs. Fidelity MSCI Industrials | Consumer Staples vs. Fidelity MSCI Consumer | Consumer Staples vs. Fidelity MSCI Communication |
| SPDR DoubleLine vs. SPDR DoubleLine Emerging | SPDR DoubleLine vs. SPDR SSgA Ultra | SPDR DoubleLine vs. SPDR Bloomberg 1 10 | SPDR DoubleLine vs. SPDR DoubleLine Total |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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