Correlation Between SPDR Kensho and Procure Space

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

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

Diversification Opportunities for SPDR Kensho and Procure Space

0.95

Correlation Coefficient

SPDR Kensho  Procure Space

Almost no diversification

The 3 months correlation between SPDR and Procure is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and Procure Space ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procure Space ETF and SPDR Kensho 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 Kensho New are associated (or correlated) with Procure Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procure Space ETF has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and Procure Space go up and down completely randomly.

Pair Corralation between SPDR Kensho and Procure Space

Given the investment horizon of 90 days SPDR Kensho is expected to generate 1.75 times less return on investment than Procure Space. But when comparing it to its historical volatility, SPDR Kensho New is 1.38 times less risky than Procure Space. It trades about 0.19 of its potential returns per unit of risk. Procure Space ETF is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,858  in Procure Space ETF on September 18, 2024 and sell it today you would earn a total of  480.00  from holding Procure Space ETF or generate 25.83% return on investment over 90 days.

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

SPDR Kensho New  vs.  Procure Space ETF

SPDR Kensho New

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho New are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, SPDR Kensho reported solid returns over the last few months and may actually be approaching a breakup point.

Procure Space ETF

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Procure Space ETF are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Procure Space displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Kensho and Procure Space

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

The idea behind SPDR Kensho New and Procure Space ETF 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.