Correlation Between SPDR SP and RBB Fund

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

By analyzing existing cross correlation between SPDR SP 400 and The RBB Fund, you can compare the effects of market volatilities on SPDR SP and RBB Fund 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 RBB Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and RBB Fund.

Diversification Opportunities for SPDR SP and RBB Fund

0.89

Correlation Coefficient

SPDR SP  RBB Fund

Very poor diversification

The 3 months correlation between SPDR and RBB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and The RBB Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB Fund 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 400 are associated (or correlated) with RBB Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Fund has no effect on the direction of SPDR SP i.e., SPDR SP and RBB Fund go up and down completely randomly.

Pair Corralation between SPDR SP and RBB Fund

Given the investment horizon of 90 days SPDR SP 400 is expected to under-perform the RBB Fund. In addition to that, SPDR SP is 1.06 times more volatile than The RBB Fund. It trades about -0.15 of its total potential returns per unit of risk. The RBB Fund is currently generating about -0.14 per unit of volatility. If you would invest  2,858  in The RBB Fund on December 1, 2024 and sell it today you would lose (233.00) from holding The RBB Fund or give up 8.15% of portfolio value over 90 days.

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

SPDR SP 400  vs.  The RBB Fund

SPDR SP 400

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 400 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

RBB Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days The RBB Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with SPDR SP and RBB Fund

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

The idea behind SPDR SP 400 and The RBB Fund 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.