Correlation Between US Global and SPDR SP

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

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

Diversification Opportunities for US Global and SPDR SP

0.89

Correlation Coefficient

US Global  SPDR SP

Very poor diversification

The 3 months correlation between JETS and SPDR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding US Global Jets and SPDR SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Kensho and US Global 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 US Global Jets are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Kensho has no effect on the direction of US Global i.e., US Global and SPDR SP go up and down completely randomly.

Pair Corralation between US Global and SPDR SP

Given the investment horizon of 90 days US Global is expected to generate 1.27 times less return on investment than SPDR SP. In addition to that, US Global is 1.01 times more volatile than SPDR SP Kensho. It trades about 0.19 of its total potential returns per unit of risk. SPDR SP Kensho is currently generating about 0.24 per unit of volatility. If you would invest  5,501  in SPDR SP Kensho on September 17, 2024 and sell it today you would earn a total of  343.50  from holding SPDR SP Kensho or generate 6.24% return on investment over 90 days.

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

US Global Jets  vs.  SPDR SP Kensho

US Global Jets

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Jets are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, US Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

SPDR SP Kensho

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Kensho are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, SPDR SP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Global and SPDR SP

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

The idea behind US Global Jets and SPDR SP Kensho 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..