Correlation Between SPDR Dow and Zug Estates

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

Diversification Opportunities for SPDR Dow and Zug Estates

-0.08

Correlation Coefficient

SPDR Dow  Zug Estates

Good diversification

The 3 months correlation between SPDR and Zug is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and Zug Estates Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zug Estates Holding 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 Zug Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zug Estates Holding has no effect on the direction of SPDR Dow i.e., SPDR Dow and Zug Estates go up and down completely randomly.

Pair Corralation between SPDR Dow and Zug Estates

Assuming the 90 days trading horizon SPDR Dow is expected to generate 28.14 times less return on investment than Zug Estates. But when comparing it to its historical volatility, SPDR Dow Jones is 1.11 times less risky than Zug Estates. It trades about 0.01 of its potential returns per unit of risk. Zug Estates Holding is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  184,500  in Zug Estates Holding on October 8, 2024 and sell it today you would earn a total of  19,500  from holding Zug Estates Holding or generate 10.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

SPDR Dow Jones  vs.  Zug Estates Holding

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.

Zug Estates Holding

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Zug Estates Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Zug Estates may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SPDR Dow and Zug Estates

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

The idea behind SPDR Dow Jones and Zug Estates Holding 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.