Correlation Between SPDR Portfolio and Defiance ETFs

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

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

Diversification Opportunities for SPDR Portfolio and Defiance ETFs

-0.38

Correlation Coefficient

SPDR Portfolio  Defiance ETFs

Very good diversification

The 3 months correlation between SPDR and Defiance is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Defiance ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance ETFs 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 SP are associated (or correlated) with Defiance ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance ETFs has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Defiance ETFs go up and down completely randomly.

Pair Corralation between SPDR Portfolio and Defiance ETFs

If you would invest  6,918  in SPDR Portfolio SP on September 17, 2024 and sell it today you would earn a total of  191.00  from holding SPDR Portfolio SP or generate 2.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

SPDR Portfolio SP  vs.  Defiance ETFs

SPDR Portfolio SP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio SP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, SPDR Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Defiance ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Defiance ETFs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR Portfolio and Defiance ETFs

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

The idea behind SPDR Portfolio SP and Defiance ETFs 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.