Correlation Between SPASX Dividend and SPDR SP

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

By analyzing existing cross correlation between SPASX Dividend Opportunities and SPDR SP World, you can compare the effects of market volatilities on SPASX Dividend and SPDR SP 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 SPASX Dividend with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX Dividend and SPDR SP.

Diversification Opportunities for SPASX Dividend and SPDR SP

0.23

Correlation Coefficient

SPASX Dividend  SPDR SP

Modest diversification

The 3 months correlation between SPASX and SPDR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and SPDR SP World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP World and SPASX Dividend 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 SPASX Dividend Opportunities are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP World has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and SPDR SP go up and down completely randomly.

Pair Corralation between SPASX Dividend and SPDR SP

Assuming the 90 days trading horizon SPASX Dividend Opportunities is expected to under-perform the SPDR SP. In addition to that, SPASX Dividend is 1.08 times more volatile than SPDR SP World. It trades about -0.02 of its total potential returns per unit of risk. SPDR SP World is currently generating about 0.21 per unit of volatility. If you would invest  4,656  in SPDR SP World on September 26, 2024 and sell it today you would earn a total of  272.00  from holding SPDR SP World or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

SPASX Dividend Opportunities  vs.  SPDR SP World

Pair Trading with SPASX Dividend and SPDR SP

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

The idea behind SPASX Dividend Opportunities and SPDR SP World 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.