Correlation Between FT Vest and SPDR SP
Can any of the company-specific risk be diversified away by investing in both FT Vest 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 FT Vest and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest SMID and SPDR SP 400, you can compare the effects of market volatilities on FT Vest 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 FT Vest with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and SPDR SP.
Diversification Opportunities for FT Vest and SPDR SP
Almost no diversification
The 3 months correlation between SDVD and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest SMID and SPDR SP 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 400 and FT Vest 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 FT Vest SMID 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 400 has no effect on the direction of FT Vest i.e., FT Vest and SPDR SP go up and down completely randomly.
Pair Corralation between FT Vest and SPDR SP
Given the investment horizon of 90 days FT Vest SMID is expected to generate 0.93 times more return on investment than SPDR SP. However, FT Vest SMID is 1.07 times less risky than SPDR SP. It trades about -0.08 of its potential returns per unit of risk. SPDR SP 400 is currently generating about -0.1 per unit of risk. If you would invest 2,107 in FT Vest SMID on December 18, 2024 and sell it today you would lose (110.00) from holding FT Vest SMID or give up 5.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
FT Vest SMID vs. SPDR SP 400
Performance |
Timeline |
FT Vest SMID |
SPDR SP 400 |
FT Vest and SPDR SP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FT Vest and SPDR SP
The main advantage of trading using opposite FT Vest and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest 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.FT Vest vs. Matthews China Discovery | FT Vest vs. Matthews Emerging Markets | FT Vest vs. Morgan Stanley Pathway | FT Vest vs. Neuberger Berman ETF |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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