Correlation Between SPDR Russell and American High

Can any of the company-specific risk be diversified away by investing in both SPDR Russell and American High 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 Russell and American High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR Russell 1000 and American High Income, you can compare the effects of market volatilities on SPDR Russell and American High 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 Russell with a short position of American High. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Russell and American High.

Diversification Opportunities for SPDR Russell and American High

0.95

Correlation Coefficient

SPDR Russell  American High

Almost no diversification

The 3 months correlation between SPDR and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Russell 1000 and American High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Me and SPDR Russell 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 Russell 1000 are associated (or correlated) with American High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Me has no effect on the direction of SPDR Russell i.e., SPDR Russell and American High go up and down completely randomly.

Pair Corralation between SPDR Russell and American High

Given the investment horizon of 90 days SPDR Russell 1000 is expected to under-perform the American High. In addition to that, SPDR Russell is 3.44 times more volatile than American High Income. It trades about -0.29 of its total potential returns per unit of risk. American High Income is currently generating about -0.26 per unit of volatility. If you would invest  951.00  in American High Income on January 20, 2024 and sell it today you would lose (12.00) from holding American High Income or give up 1.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

SPDR Russell 1000  vs.  American High Income

SPDR Russell 1000

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Russell 1000 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, SPDR Russell is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

American High Me

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American High Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, American High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR Russell and American High

The main advantage of trading using opposite SPDR Russell and American High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Russell position performs unexpectedly, American High 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 American High will offset losses from the drop in American High's long position.

The idea behind SPDR Russell 1000 and American High Income 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.