Correlation Between SPDR Dow and Amundi Index

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

By analyzing existing cross correlation between SPDR Dow Jones and Amundi Index Solutions, you can compare the effects of market volatilities on SPDR Dow and Amundi Index 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 Dow with a short position of Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and Amundi Index.

Diversification Opportunities for SPDR Dow and Amundi Index

0.23

Correlation Coefficient

SPDR Dow  Amundi Index

Modest diversification

The 3 months correlation between SPDR and Amundi is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions and SPDR Dow 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 Dow Jones are associated (or correlated) with Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of SPDR Dow i.e., SPDR Dow and Amundi Index go up and down completely randomly.

Pair Corralation between SPDR Dow and Amundi Index

Assuming the 90 days trading horizon SPDR Dow is expected to generate 33.9 times less return on investment than Amundi Index. In addition to that, SPDR Dow is 1.14 times more volatile than Amundi Index Solutions. It trades about 0.01 of its total potential returns per unit of risk. Amundi Index Solutions is currently generating about 0.28 per unit of volatility. If you would invest  11,528  in Amundi Index Solutions on September 17, 2024 and sell it today you would earn a total of  330.00  from holding Amundi Index Solutions or generate 2.86% return on investment over 90 days.

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

SPDR Dow Jones  vs.  Amundi Index Solutions

SPDR Dow Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Dow Jones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPDR Dow is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Amundi Index Solutions

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Amundi Index may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SPDR Dow and Amundi Index

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

The idea behind SPDR Dow Jones and Amundi Index Solutions 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.