Correlation Between SPDR Portfolio and ZEGA Buy

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

Diversification Opportunities for SPDR Portfolio and ZEGA Buy

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SPDR and ZEGA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Emerging and ZEGA Buy And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEGA Buy And and SPDR Portfolio 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 Portfolio Emerging are associated (or correlated) with ZEGA Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEGA Buy And has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and ZEGA Buy go up and down completely randomly.

Pair Corralation between SPDR Portfolio and ZEGA Buy

Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.12 times less return on investment than ZEGA Buy. In addition to that, SPDR Portfolio is 1.08 times more volatile than ZEGA Buy And. It trades about 0.02 of its total potential returns per unit of risk. ZEGA Buy And is currently generating about 0.03 per unit of volatility. If you would invest  1,641  in ZEGA Buy And on March 6, 2023 and sell it today you would earn a total of  44.00  from holding ZEGA Buy And or generate 2.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SPDR Portfolio Emerging  vs.  ZEGA Buy And

 Performance (%) 
       Timeline  
SPDR Portfolio Emerging 

SPDR Performance

0 of 100

Over the last 90 days SPDR Portfolio Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, SPDR Portfolio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.
ZEGA Buy And 

ZEGA Performance

5 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in ZEGA Buy And are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ZEGA Buy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SPDR Portfolio and ZEGA Buy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Portfolio and ZEGA Buy

The main advantage of trading using opposite SPDR Portfolio and ZEGA Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, ZEGA Buy 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 ZEGA Buy will offset losses from the drop in ZEGA Buy's long position.
The idea behind SPDR Portfolio Emerging and ZEGA Buy And 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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