Correlation Between CHIK and SPDR SP

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

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

Diversification Opportunities for CHIK and SPDR SP

0.2

Correlation Coefficient

CHIK  SPDR SP

Modest diversification

The 3 months correlation between CHIK and SPDR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CHIK and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging and CHIK 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 CHIK 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 Emerging has no effect on the direction of CHIK i.e., CHIK and SPDR SP go up and down completely randomly.

Pair Corralation between CHIK and SPDR SP

If you would invest  11,677  in SPDR SP Emerging on October 1, 2024 and sell it today you would earn a total of  34.00  from holding SPDR SP Emerging or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

CHIK  vs.  SPDR SP Emerging

CHIK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, CHIK is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

SPDR SP Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SPDR SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHIK and SPDR SP

The main advantage of trading using opposite CHIK and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIK 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 CHIK and SPDR SP Emerging 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..