Correlation Between SPDR SP and Quadratic Interest

Can any of the company-specific risk be diversified away by investing in both SPDR SP and Quadratic Interest 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 Quadratic Interest 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 Quadratic Interest Rate, you can compare the effects of market volatilities on SPDR SP and Quadratic Interest 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 Quadratic Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Quadratic Interest.

Diversification Opportunities for SPDR SP and Quadratic Interest

-0.82

Correlation Coefficient

SPDR SP  Quadratic Interest

Pay attention - limited upside

The 3 months correlation between SPDR and Quadratic is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Quadratic Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Interest Rate 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 Quadratic Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Interest Rate has no effect on the direction of SPDR SP i.e., SPDR SP and Quadratic Interest go up and down completely randomly.

Pair Corralation between SPDR SP and Quadratic Interest

Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.33 times more return on investment than Quadratic Interest. However, SPDR SP is 1.33 times more volatile than Quadratic Interest Rate. It trades about 0.14 of its potential returns per unit of risk. Quadratic Interest Rate is currently generating about -0.19 per unit of risk. If you would invest  56,196  in SPDR SP 500 on August 30, 2024 and sell it today you would earn a total of  3,687  from holding SPDR SP 500 or generate 6.56% return on investment over 90 days.

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

SPDR SP 500  vs.  Quadratic Interest Rate

SPDR SP 500

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Quadratic Interest Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadratic Interest Rate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with SPDR SP and Quadratic Interest

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

The idea behind SPDR SP 500 and Quadratic Interest Rate 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.