Correlation Between Advanced Container and SPDR SP

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

By analyzing existing cross correlation between Advanced Container Technologies and SPDR SP 500, you can compare the effects of market volatilities on Advanced Container 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 Advanced Container with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Container and SPDR SP.

Diversification Opportunities for Advanced Container and SPDR SP

-0.64

Correlation Coefficient

Advanced Container  SPDR SP

Excellent diversification

The 3 months correlation between Advanced and SPDR is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Container Technologie and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and Advanced Container 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 Advanced Container Technologies 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 500 has no effect on the direction of Advanced Container i.e., Advanced Container and SPDR SP go up and down completely randomly.

Pair Corralation between Advanced Container and SPDR SP

Given the investment horizon of 90 days Advanced Container Technologies is expected to generate 72.91 times more return on investment than SPDR SP. However, Advanced Container is 72.91 times more volatile than SPDR SP 500. It trades about 0.07 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.12 per unit of risk. If you would invest  40.00  in Advanced Container Technologies on September 25, 2024 and sell it today you would lose (39.99) from holding Advanced Container Technologies or give up 99.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Advanced Container Technologie  vs.  SPDR SP 500

Advanced Container

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Container Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

SPDR SP 500

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SPDR SP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advanced Container and SPDR SP

The main advantage of trading using opposite Advanced Container and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Container 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 Advanced Container Technologies and SPDR SP 500 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.