Correlation Between SPDR SPASX and Airlie Australian

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

By analyzing existing cross correlation between SPDR SPASX 200 and Airlie Australian Share, you can compare the effects of market volatilities on SPDR SPASX and Airlie Australian 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 SPASX with a short position of Airlie Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and Airlie Australian.

Diversification Opportunities for SPDR SPASX and Airlie Australian

0.94

Correlation Coefficient

SPDR SPASX  Airlie Australian

Almost no diversification

The 3 months correlation between SPDR and Airlie is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and Airlie Australian Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airlie Australian Share and SPDR SPASX 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 SPASX 200 are associated (or correlated) with Airlie Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airlie Australian Share has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and Airlie Australian go up and down completely randomly.

Pair Corralation between SPDR SPASX and Airlie Australian

Assuming the 90 days trading horizon SPDR SPASX 200 is expected to generate 0.92 times more return on investment than Airlie Australian. However, SPDR SPASX 200 is 1.09 times less risky than Airlie Australian. It trades about -0.05 of its potential returns per unit of risk. Airlie Australian Share is currently generating about -0.06 per unit of risk. If you would invest  2,594  in SPDR SPASX 200 on December 30, 2024 and sell it today you would lose (63.00) from holding SPDR SPASX 200 or give up 2.43% of portfolio value over 90 days.

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

SPDR SPASX 200  vs.  Airlie Australian Share

SPDR SPASX 200

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SPASX 200 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SPDR SPASX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Airlie Australian Share

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airlie Australian Share has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Airlie Australian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR SPASX and Airlie Australian

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

The idea behind SPDR SPASX 200 and Airlie Australian Share 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.