Correlation Between SPDR Kensho and SPDR SP

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

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

Diversification Opportunities for SPDR Kensho and SPDR SP

0.19

Correlation Coefficient

SPDR Kensho  SPDR SP

Average diversification

The 3 months correlation between SPDR and SPDR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho Clean and SPDR SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Kensho 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 Clean 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 Kensho has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and SPDR SP go up and down completely randomly.

Pair Corralation between SPDR Kensho and SPDR SP

Given the investment horizon of 90 days SPDR Kensho is expected to generate 1.61 times less return on investment than SPDR SP. In addition to that, SPDR Kensho is 1.58 times more volatile than SPDR SP Kensho. It trades about 0.09 of its total potential returns per unit of risk. SPDR SP Kensho is currently generating about 0.23 per unit of volatility. If you would invest  5,901  in SPDR SP Kensho on September 2, 2024 and sell it today you would earn a total of  1,016  from holding SPDR SP Kensho or generate 17.22% return on investment over 90 days.

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

SPDR Kensho Clean  vs.  SPDR SP Kensho

SPDR Kensho Clean

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho Clean are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPDR Kensho may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPDR SP Kensho

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Kensho are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, SPDR SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Kensho and SPDR SP

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