Correlation Between SPDR SP and Rareview Capital

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

By analyzing existing cross correlation between SPDR SP 500 and Rareview Capital, you can compare the effects of market volatilities on SPDR SP and Rareview Capital 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 Rareview Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Rareview Capital.

Diversification Opportunities for SPDR SP and Rareview Capital

-0.84

Correlation Coefficient

SPDR SP  Rareview Capital

Pay attention - limited upside

The 3 months correlation between SPDR and Rareview is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Rareview Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rareview Capital 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 500 are associated (or correlated) with Rareview Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rareview Capital has no effect on the direction of SPDR SP i.e., SPDR SP and Rareview Capital go up and down completely randomly.

Pair Corralation between SPDR SP and Rareview Capital

If you would invest  59,553  in SPDR SP 500 on September 26, 2024 and sell it today you would earn a total of  577.00  from holding SPDR SP 500 or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

SPDR SP 500  vs.  Rareview Capital

SPDR SP 500

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SPDR SP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Rareview Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rareview Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rareview Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR SP and Rareview Capital

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

The idea behind SPDR SP 500 and Rareview Capital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.