Correlation Between SPDR SP and Vesper Large

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

Diversification Opportunities for SPDR SP and Vesper Large

-0.09

Correlation Coefficient

SPDR SP  Vesper Large

Good diversification

The 3 months correlation between SPDR and Vesper is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Vesper Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vesper Large Cap 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 Vesper Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vesper Large Cap has no effect on the direction of SPDR SP i.e., SPDR SP and Vesper Large go up and down completely randomly.

Pair Corralation between SPDR SP and Vesper Large

Considering the 90-day investment horizon SPDR SP 500 is expected to under-perform the Vesper Large. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP 500 is 129.81 times less risky than Vesper Large. The etf trades about -0.05 of its potential returns per unit of risk. The Vesper Large Cap is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,023  in Vesper Large Cap on December 28, 2024 and sell it today you would earn a total of  64,047  from holding Vesper Large Cap or generate 2118.66% return on investment over 90 days.

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

SPDR SP 500  vs.  Vesper Large Cap

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.

Vesper Large Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vesper Large Cap are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vesper Large displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and Vesper Large

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

The idea behind SPDR SP 500 and Vesper Large Cap 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..