Correlation Between SPDR SP and 2023 EFT

Can any of the company-specific risk be diversified away by investing in both SPDR SP and 2023 EFT 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 2023 EFT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR SP 600 and 2023 EFT Series, you can compare the effects of market volatilities on SPDR SP and 2023 EFT 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 2023 EFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and 2023 EFT.

Diversification Opportunities for SPDR SP and 2023 EFT

0.82

Correlation Coefficient

SPDR SP  2023 EFT

Very poor diversification

The 3 months correlation between SPDR and 2023 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 600 and 2023 EFT Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 EFT Series 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 600 are associated (or correlated) with 2023 EFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 EFT Series has no effect on the direction of SPDR SP i.e., SPDR SP and 2023 EFT go up and down completely randomly.

Pair Corralation between SPDR SP and 2023 EFT

Given the investment horizon of 90 days SPDR SP 600 is expected to under-perform the 2023 EFT. In addition to that, SPDR SP is 1.28 times more volatile than 2023 EFT Series. It trades about -0.13 of its total potential returns per unit of risk. 2023 EFT Series is currently generating about -0.03 per unit of volatility. If you would invest  3,050  in 2023 EFT Series on December 27, 2024 and sell it today you would lose (53.00) from holding 2023 EFT Series or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

SPDR SP 600  vs.  2023 EFT Series

SPDR SP 600

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 600 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

2023 EFT Series

Risk-Adjusted Performance

Very Weak

Over the last 90 days 2023 EFT Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, 2023 EFT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR SP and 2023 EFT

The main advantage of trading using opposite SPDR SP and 2023 EFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, 2023 EFT 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 2023 EFT will offset losses from the drop in 2023 EFT's long position.

The idea behind SPDR SP 600 and 2023 EFT Series 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.