Correlation Between SPDR Portfolio and FolioBeyond Rising

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

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

Diversification Opportunities for SPDR Portfolio and FolioBeyond Rising

-0.29

Correlation Coefficient

SPDR Portfolio  FolioBeyond Rising

Very good diversification

The 3 months correlation between SPDR and FolioBeyond is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Corporate and FolioBeyond Rising Rates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FolioBeyond Rising Rates and SPDR Portfolio 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 Portfolio Corporate are associated (or correlated) with FolioBeyond Rising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FolioBeyond Rising Rates has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and FolioBeyond Rising go up and down completely randomly.

Pair Corralation between SPDR Portfolio and FolioBeyond Rising

Given the investment horizon of 90 days SPDR Portfolio Corporate is expected to generate 0.76 times more return on investment than FolioBeyond Rising. However, SPDR Portfolio Corporate is 1.32 times less risky than FolioBeyond Rising. It trades about 0.1 of its potential returns per unit of risk. FolioBeyond Rising Rates is currently generating about 0.05 per unit of risk. If you would invest  2,844  in SPDR Portfolio Corporate on December 29, 2024 and sell it today you would earn a total of  54.00  from holding SPDR Portfolio Corporate or generate 1.9% return on investment over 90 days.

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

SPDR Portfolio Corporate  vs.  FolioBeyond Rising Rates

SPDR Portfolio Corporate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio Corporate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

FolioBeyond Rising Rates

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FolioBeyond Rising Rates are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FolioBeyond Rising is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPDR Portfolio and FolioBeyond Rising

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

The idea behind SPDR Portfolio Corporate and FolioBeyond Rising Rates 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 Global Correlations module to find global opportunities by holding instruments from different markets.