Correlation Between SPDR SP and AB Active

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

Diversification Opportunities for SPDR SP and AB Active

0.99

Correlation Coefficient

SPDR SP  AB Active

No risk reduction

The 3 months correlation between SPDR and LRGC is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, 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 AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of SPDR SP i.e., SPDR SP and AB Active go up and down completely randomly.

Pair Corralation between SPDR SP and AB Active

Considering the 90-day investment horizon SPDR SP 500 is expected to under-perform the AB Active. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP 500 is 1.03 times less risky than AB Active. The etf trades about -0.07 of its potential returns per unit of risk. The AB Active ETFs, is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  6,818  in AB Active ETFs, on December 27, 2024 and sell it today you would lose (283.00) from holding AB Active ETFs, or give up 4.15% of portfolio value over 90 days.

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

SPDR SP 500  vs.  AB Active ETFs,

SPDR SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SPDR SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AB Active ETFs,

Risk-Adjusted Performance

Very Weak

Over the last 90 days AB Active ETFs, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AB Active 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 AB Active

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

The idea behind SPDR SP 500 and AB Active 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.