Correlation Between SPDR SP and Procure Space

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

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

Diversification Opportunities for SPDR SP and Procure Space

0.94

Correlation Coefficient

SPDR SP  Procure Space

Almost no diversification

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

Pair Corralation between SPDR SP and Procure Space

Given the investment horizon of 90 days SPDR SP is expected to generate 1.66 times less return on investment than Procure Space. But when comparing it to its historical volatility, SPDR SP Kensho is 1.42 times less risky than Procure Space. It trades about 0.2 of its potential returns per unit of risk. Procure Space ETF is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,858  in Procure Space ETF on September 18, 2024 and sell it today you would earn a total of  480.00  from holding Procure Space ETF or generate 25.83% return on investment over 90 days.

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

SPDR SP Kensho  vs.  Procure Space ETF

SPDR SP Kensho

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Kensho are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, SPDR SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Procure Space ETF

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Procure Space ETF are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Procure Space displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and Procure Space

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

The idea behind SPDR SP Kensho and Procure Space ETF 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..