Correlation Between SPDR Kensho and TrueShares Technology

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

By analyzing existing cross correlation between SPDR Kensho Future and TrueShares Technology AI, you can compare the effects of market volatilities on SPDR Kensho and TrueShares Technology 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 Kensho with a short position of TrueShares Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and TrueShares Technology.

Diversification Opportunities for SPDR Kensho and TrueShares Technology

0.83

Correlation Coefficient

SPDR Kensho  TrueShares Technology

Very poor diversification

The 3 months correlation between SPDR and TrueShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho Future and TrueShares Technology AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Technology and SPDR Kensho 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 Kensho Future are associated (or correlated) with TrueShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Technology has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and TrueShares Technology go up and down completely randomly.

Pair Corralation between SPDR Kensho and TrueShares Technology

Given the investment horizon of 90 days SPDR Kensho Future is expected to generate 0.77 times more return on investment than TrueShares Technology. However, SPDR Kensho Future is 1.3 times less risky than TrueShares Technology. It trades about 0.0 of its potential returns per unit of risk. TrueShares Technology AI is currently generating about -0.19 per unit of risk. If you would invest  6,826  in SPDR Kensho Future on October 10, 2024 and sell it today you would lose (21.00) from holding SPDR Kensho Future or give up 0.31% of portfolio value over 90 days.

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

SPDR Kensho Future  vs.  TrueShares Technology AI

SPDR Kensho Future

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho Future are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, SPDR Kensho may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TrueShares Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Technology AI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TrueShares Technology 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 Kensho and TrueShares Technology

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

The idea behind SPDR Kensho Future and TrueShares Technology AI 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.