Correlation Between SPDR Portfolio and Oppenheimer Russell

Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Oppenheimer Russell 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 Oppenheimer Russell 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 Oppenheimer Russell 2000, you can compare the effects of market volatilities on SPDR Portfolio and Oppenheimer Russell 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 Oppenheimer Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Oppenheimer Russell.

Diversification Opportunities for SPDR Portfolio and Oppenheimer Russell

0.88

Correlation Coefficient

SPDR Portfolio  Oppenheimer Russell

Very poor diversification

The 3 months correlation between SPDR and Oppenheimer is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Oppenheimer Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Russell 2000 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 Oppenheimer Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Russell 2000 has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Oppenheimer Russell go up and down completely randomly.

Pair Corralation between SPDR Portfolio and Oppenheimer Russell

Given the investment horizon of 90 days SPDR Portfolio SP is expected to under-perform the Oppenheimer Russell. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Portfolio SP is 1.02 times less risky than Oppenheimer Russell. The etf trades about -0.11 of its potential returns per unit of risk. The Oppenheimer Russell 2000 is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,982  in Oppenheimer Russell 2000 on December 27, 2024 and sell it today you would lose (158.00) from holding Oppenheimer Russell 2000 or give up 3.97% of portfolio value over 90 days.

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

SPDR Portfolio SP  vs.  Oppenheimer Russell 2000

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. In spite of latest unsteady performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Oppenheimer Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oppenheimer Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Oppenheimer Russell is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR Portfolio and Oppenheimer Russell

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

The idea behind SPDR Portfolio SP and Oppenheimer Russell 2000 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.