Correlation Between SPDR SP and Brown Advisory

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

By analyzing existing cross correlation between SPDR SP 500 and Brown Advisory Flexible, you can compare the effects of market volatilities on SPDR SP and Brown Advisory 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 SP with a short position of Brown Advisory. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Brown Advisory.

Diversification Opportunities for SPDR SP and Brown Advisory

0.0

Correlation Coefficient

SPDR SP  Brown Advisory

Pay attention - limited upside

The 3 months correlation between SPDR and Brown is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Brown Advisory Flexible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory Flexible and SPDR SP 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 SP 500 are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory Flexible has no effect on the direction of SPDR SP i.e., SPDR SP and Brown Advisory go up and down completely randomly.

Pair Corralation between SPDR SP and Brown Advisory

If you would invest  55,641  in SPDR SP 500 on October 10, 2024 and sell it today you would earn a total of  3,222  from holding SPDR SP 500 or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SPDR SP 500  vs.  Brown Advisory Flexible

SPDR SP 500

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SPDR SP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Brown Advisory Flexible

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Brown Advisory Flexible has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Brown Advisory is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR SP and Brown Advisory

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

The idea behind SPDR SP 500 and Brown Advisory Flexible 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.