Correlation Between SPDR Portfolio and StockSnips

Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and StockSnips 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 StockSnips 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 StockSnips AI Powered Sentiment, you can compare the effects of market volatilities on SPDR Portfolio and StockSnips 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 StockSnips. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and StockSnips.

Diversification Opportunities for SPDR Portfolio and StockSnips

0.87

Correlation Coefficient

SPDR Portfolio  StockSnips

Very poor diversification

The 3 months correlation between SPDR and StockSnips is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and StockSnips AI Powered Sentimen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StockSnips AI Powered 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 StockSnips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StockSnips AI Powered has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and StockSnips go up and down completely randomly.

Pair Corralation between SPDR Portfolio and StockSnips

Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 0.85 times more return on investment than StockSnips. However, SPDR Portfolio SP is 1.18 times less risky than StockSnips. It trades about -0.02 of its potential returns per unit of risk. StockSnips AI Powered Sentiment is currently generating about -0.06 per unit of risk. If you would invest  7,077  in SPDR Portfolio SP on December 1, 2024 and sell it today you would lose (88.00) from holding SPDR Portfolio SP or give up 1.24% of portfolio value over 90 days.

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

SPDR Portfolio SP  vs.  StockSnips AI Powered Sentimen

SPDR Portfolio SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Portfolio SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, SPDR Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

StockSnips AI Powered

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SPDR Portfolio and StockSnips

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

The idea behind SPDR Portfolio SP and StockSnips AI Powered Sentiment 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.