Correlation Between SPDR Dow and Ams AG

Can any of the company-specific risk be diversified away by investing in both SPDR Dow and Ams AG 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 Ams AG 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 Ams AG, you can compare the effects of market volatilities on SPDR Dow and Ams AG 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 Ams AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and Ams AG.

Diversification Opportunities for SPDR Dow and Ams AG

-0.31

Correlation Coefficient

SPDR Dow  Ams AG

Very good diversification

The 3 months correlation between SPDR and Ams is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and Ams AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ams AG 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 Ams AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ams AG has no effect on the direction of SPDR Dow i.e., SPDR Dow and Ams AG go up and down completely randomly.

Pair Corralation between SPDR Dow and Ams AG

Assuming the 90 days trading horizon SPDR Dow Jones is expected to generate 0.19 times more return on investment than Ams AG. However, SPDR Dow Jones is 5.33 times less risky than Ams AG. It trades about 0.04 of its potential returns per unit of risk. Ams AG is currently generating about -0.07 per unit of risk. If you would invest  1,629  in SPDR Dow Jones on September 14, 2024 and sell it today you would earn a total of  134.00  from holding SPDR Dow Jones or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SPDR Dow Jones  vs.  Ams AG

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.

Ams AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ams AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with SPDR Dow and Ams AG

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

The idea behind SPDR Dow Jones and Ams AG 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.