Correlation Between SPDR SP and SPDR SP

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 400 and SPDR SP 400, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR SP.

Diversification Opportunities for SPDR SP and SPDR SP

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between SPDR and SPDR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and SPDR SP 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 400 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 400 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 400 has no effect on the direction of SPDR SP i.e., SPDR SP and SPDR SP go up and down completely randomly.

Pair Corralation between SPDR SP and SPDR SP

Given the investment horizon of 90 days SPDR SP 400 is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP 400 is 1.08 times less risky than SPDR SP. The etf trades about -0.03 of its potential returns per unit of risk. The SPDR SP 400 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,902  in SPDR SP 400 on January 20, 2024 and sell it today you would earn a total of  221.00  from holding SPDR SP 400 or generate 2.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

SPDR SP 400  vs.  SPDR SP 400

 Performance 
       Timeline  
SPDR SP 400 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SPDR SP 400 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPDR SP is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
SPDR SP 400 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 400 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in May 2024.

SPDR SP and SPDR SP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR SP and SPDR SP

The main advantage of trading using opposite SPDR SP and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.
The idea behind SPDR SP 400 and SPDR SP 400 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities