Correlation Between SPDR SP and Zacks Trust

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

By analyzing existing cross correlation between SPDR SP MIDCAP and Zacks Trust, you can compare the effects of market volatilities on SPDR SP and Zacks Trust 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 Zacks Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Zacks Trust.

Diversification Opportunities for SPDR SP and Zacks Trust

0.0

Correlation Coefficient

SPDR SP  Zacks Trust

Pay attention - limited upside

The 3 months correlation between SPDR and Zacks is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and Zacks Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Trust 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 MIDCAP are associated (or correlated) with Zacks Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks Trust has no effect on the direction of SPDR SP i.e., SPDR SP and Zacks Trust go up and down completely randomly.

Pair Corralation between SPDR SP and Zacks Trust

If you would invest  3,220  in Zacks Trust on August 30, 2024 and sell it today you would earn a total of  424.00  from holding Zacks Trust or generate 13.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

SPDR SP MIDCAP  vs.  Zacks Trust

SPDR SP MIDCAP

Risk-Adjusted Performance

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Good

Over the last 90 days SPDR SP MIDCAP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, SPDR SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zacks Trust

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Zacks Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak forward indicators, Zacks Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and Zacks Trust

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

The idea behind SPDR SP MIDCAP and Zacks Trust 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.