Correlation Between SPDR SP and Strategic Advisers

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

Diversification Opportunities for SPDR SP and Strategic Advisers

-0.55

Correlation Coefficient

SPDR SP  Strategic Advisers

Excellent diversification

The 3 months correlation between SPDR and Strategic is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Strategic Advisers Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Advisers 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 Strategic Advisers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Advisers has no effect on the direction of SPDR SP i.e., SPDR SP and Strategic Advisers go up and down completely randomly.

Pair Corralation between SPDR SP and Strategic Advisers

Considering the 90-day investment horizon SPDR SP 500 is expected to generate 2.26 times more return on investment than Strategic Advisers. However, SPDR SP is 2.26 times more volatile than Strategic Advisers Fidelity. It trades about 0.2 of its potential returns per unit of risk. Strategic Advisers Fidelity is currently generating about -0.25 per unit of risk. If you would invest  56,112  in SPDR SP 500 on August 16, 2024 and sell it today you would earn a total of  3,607  from holding SPDR SP 500 or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.73%
Values	Daily Returns

SPDR SP 500  vs.  Strategic Advisers Fidelity

SPDR SP 500

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Strategic Advisers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Advisers Fidelity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Strategic Advisers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR SP and Strategic Advisers

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

The idea behind SPDR SP 500 and Strategic Advisers Fidelity 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.