Correlation Between SPDR SP and Amundi ETF

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

Diversification Opportunities for SPDR SP and Amundi ETF

0.45

Correlation Coefficient

SPDR SP  Amundi ETF

Very weak diversification

The 3 months correlation between SPDR and Amundi is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Amundi ETF Govies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi ETF Govies 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 Amundi ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi ETF Govies has no effect on the direction of SPDR SP i.e., SPDR SP and Amundi ETF go up and down completely randomly.

Pair Corralation between SPDR SP and Amundi ETF

Assuming the 90 days trading horizon SPDR SP 500 is expected to under-perform the Amundi ETF. In addition to that, SPDR SP is 14.78 times more volatile than Amundi ETF Govies. It trades about -0.03 of its total potential returns per unit of risk. Amundi ETF Govies is currently generating about 0.22 per unit of volatility. If you would invest  12,254  in Amundi ETF Govies on December 1, 2024 and sell it today you would earn a total of  91.00  from holding Amundi ETF Govies or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

SPDR SP 500  vs.  Amundi ETF Govies

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. Despite somewhat 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.

Amundi ETF Govies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi ETF Govies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Amundi ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR SP and Amundi ETF

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

The idea behind SPDR SP 500 and Amundi ETF Govies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.