Correlation Between SPDR SP and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Aeorema Communications 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 Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Materials and Aeorema Communications Plc, you can compare the effects of market volatilities on SPDR SP and Aeorema Communications 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 Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Aeorema Communications.
Diversification Opportunities for SPDR SP and Aeorema Communications
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Aeorema is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Materials and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications 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 Materials are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of SPDR SP i.e., SPDR SP and Aeorema Communications go up and down completely randomly.
Pair Corralation between SPDR SP and Aeorema Communications
Assuming the 90 days trading horizon SPDR SP Materials is expected to generate 0.63 times more return on investment than Aeorema Communications. However, SPDR SP Materials is 1.59 times less risky than Aeorema Communications. It trades about 0.04 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.2 per unit of risk. If you would invest 4,113 in SPDR SP Materials on December 30, 2024 and sell it today you would earn a total of 98.00 from holding SPDR SP Materials or generate 2.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR SP Materials vs. Aeorema Communications Plc
Performance |
Timeline |
SPDR SP Materials |
Aeorema Communications |
SPDR SP and Aeorema Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SP and Aeorema Communications
The main advantage of trading using opposite SPDR SP and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.SPDR SP vs. SPDR Dow Jones | SPDR SP vs. SPDR SP Dividend | SPDR SP vs. SPDR Barclays Euro | SPDR SP vs. SPDR SP Consumer |
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Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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