Correlation Between Defiance Quantum and SPDR Portfolio

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

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

Diversification Opportunities for Defiance Quantum and SPDR Portfolio

-0.35

Correlation Coefficient

Defiance Quantum  SPDR Portfolio

Very good diversification

The 3 months correlation between Defiance and SPDR is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Quantum ETF and SPDR Portfolio Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Corporate and Defiance Quantum 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 Defiance Quantum ETF are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Corporate has no effect on the direction of Defiance Quantum i.e., Defiance Quantum and SPDR Portfolio go up and down completely randomly.

Pair Corralation between Defiance Quantum and SPDR Portfolio

Given the investment horizon of 90 days Defiance Quantum ETF is expected to generate 3.36 times more return on investment than SPDR Portfolio. However, Defiance Quantum is 3.36 times more volatile than SPDR Portfolio Corporate. It trades about 0.1 of its potential returns per unit of risk. SPDR Portfolio Corporate is currently generating about 0.04 per unit of risk. If you would invest  4,476  in Defiance Quantum ETF on October 5, 2024 and sell it today you would earn a total of  3,765  from holding Defiance Quantum ETF or generate 84.12% return on investment over 90 days.

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

Defiance Quantum ETF  vs.  SPDR Portfolio Corporate

Defiance Quantum ETF

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Quantum ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Defiance Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

SPDR Portfolio Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Portfolio Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, SPDR Portfolio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Defiance Quantum and SPDR Portfolio

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

The idea behind Defiance Quantum ETF and SPDR Portfolio Corporate 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.