Correlation Between SPDR Portfolio and EMQQ Emerging

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

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

Diversification Opportunities for SPDR Portfolio and EMQQ Emerging

0.95

Correlation Coefficient

SPDR Portfolio  EMQQ Emerging

Almost no diversification

The 3 months correlation between SPDR and EMQQ is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Emerging and EMQQ The Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMQQ The Emerging 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 Emerging are associated (or correlated) with EMQQ Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMQQ The Emerging has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and EMQQ Emerging go up and down completely randomly.

Pair Corralation between SPDR Portfolio and EMQQ Emerging

Given the investment horizon of 90 days SPDR Portfolio is expected to generate 4.46 times less return on investment than EMQQ Emerging. But when comparing it to its historical volatility, SPDR Portfolio Emerging is 1.82 times less risky than EMQQ Emerging. It trades about 0.05 of its potential returns per unit of risk. EMQQ The Emerging is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,531  in EMQQ The Emerging on December 26, 2024 and sell it today you would earn a total of  397.00  from holding EMQQ The Emerging or generate 11.24% return on investment over 90 days.

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

SPDR Portfolio Emerging  vs.  EMQQ The Emerging

SPDR Portfolio Emerging

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio Emerging are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, SPDR Portfolio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

EMQQ The Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EMQQ The Emerging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EMQQ Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SPDR Portfolio and EMQQ Emerging

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

The idea behind SPDR Portfolio Emerging and EMQQ The Emerging 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.