Correlation Between Aquagold International and SPDR SP

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

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

Diversification Opportunities for Aquagold International and SPDR SP

0.79

Correlation Coefficient

Aquagold International  SPDR SP

Poor diversification

The 3 months correlation between Aquagold and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and SPDR SP Homebuilders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Homebuilders and Aquagold International 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 Aquagold International 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 Homebuilders has no effect on the direction of Aquagold International i.e., Aquagold International and SPDR SP go up and down completely randomly.

Pair Corralation between Aquagold International and SPDR SP

Given the investment horizon of 90 days Aquagold International is expected to under-perform the SPDR SP. In addition to that, Aquagold International is 15.25 times more volatile than SPDR SP Homebuilders. It trades about -0.22 of its total potential returns per unit of risk. SPDR SP Homebuilders is currently generating about -0.41 per unit of volatility. If you would invest  11,419  in SPDR SP Homebuilders on October 14, 2024 and sell it today you would lose (1,181) from holding SPDR SP Homebuilders or give up 10.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Aquagold International  vs.  SPDR SP Homebuilders

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

SPDR SP Homebuilders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Homebuilders has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's technical indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Aquagold International and SPDR SP

The main advantage of trading using opposite Aquagold International and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International and SPDR SP Homebuilders 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.