Correlation Between SPDR SP and BlackRock Future

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

By analyzing existing cross correlation between SPDR SP Bank and BlackRock Future Financial, you can compare the effects of market volatilities on SPDR SP and BlackRock Future 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 BlackRock Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and BlackRock Future.

Diversification Opportunities for SPDR SP and BlackRock Future

0.9

Correlation Coefficient

SPDR SP  BlackRock Future

Almost no diversification

The 3 months correlation between SPDR and BlackRock is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Bank and BlackRock Future Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Future Fin 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 Bank are associated (or correlated) with BlackRock Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Future Fin has no effect on the direction of SPDR SP i.e., SPDR SP and BlackRock Future go up and down completely randomly.

Pair Corralation between SPDR SP and BlackRock Future

Considering the 90-day investment horizon SPDR SP Bank is expected to generate 0.93 times more return on investment than BlackRock Future. However, SPDR SP Bank is 1.07 times less risky than BlackRock Future. It trades about -0.02 of its potential returns per unit of risk. BlackRock Future Financial is currently generating about -0.08 per unit of risk. If you would invest  5,510  in SPDR SP Bank on December 29, 2024 and sell it today you would lose (149.00) from holding SPDR SP Bank or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

SPDR SP Bank  vs.  BlackRock Future Financial

SPDR SP Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, SPDR SP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock Future Fin

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Future Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with SPDR SP and BlackRock Future

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

The idea behind SPDR SP Bank and BlackRock Future Financial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.