Correlation Between SPDR Portfolio and Apple

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

By analyzing existing cross correlation between SPDR Portfolio SP and Apple Inc, you can compare the effects of market volatilities on SPDR Portfolio and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Apple.

Diversification Opportunities for SPDR Portfolio and Apple

-0.6

Correlation Coefficient

SPDR Portfolio  Apple

Excellent diversification

The 3 months correlation between SPDR and Apple is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 SP are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Apple go up and down completely randomly.

Pair Corralation between SPDR Portfolio and Apple

Given the investment horizon of 90 days SPDR Portfolio SP is expected to under-perform the Apple. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Portfolio SP is 1.14 times less risky than Apple. The etf trades about -0.09 of its potential returns per unit of risk. The Apple Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  17,003  in Apple Inc on January 30, 2024 and sell it today you would lose (73.00) from holding Apple Inc or give up 0.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

SPDR Portfolio SP  vs.  Apple Inc

SPDR Portfolio SP

Risk-Adjusted Performance

5 of 100

Modest

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

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with SPDR Portfolio and Apple

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

The idea behind SPDR Portfolio SP and Apple Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.