Correlation Between SPDR SP and ZCAN
Can any of the company-specific risk be diversified away by investing in both SPDR SP and ZCAN 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 ZCAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Insurance and ZCAN, you can compare the effects of market volatilities on SPDR SP and ZCAN 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 ZCAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and ZCAN.
Diversification Opportunities for SPDR SP and ZCAN
Pay attention - limited upside
The 3 months correlation between SPDR and ZCAN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Insurance and ZCAN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCAN 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 Insurance are associated (or correlated) with ZCAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZCAN has no effect on the direction of SPDR SP i.e., SPDR SP and ZCAN go up and down completely randomly.
Pair Corralation between SPDR SP and ZCAN
If you would invest (100.00) in ZCAN on January 25, 2024 and sell it today you would earn a total of 100.00 from holding ZCAN or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
SPDR SP Insurance vs. ZCAN
Performance |
| Timeline |
| SPDR SP Insurance |
| ZCAN |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR SP and ZCAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and ZCAN
The main advantage of trading using opposite SPDR SP and ZCAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, ZCAN 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 ZCAN will offset losses from the drop in ZCAN's long position.The idea behind SPDR SP Insurance and ZCAN 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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