Correlation Between SPDR SP and WisdomTree Inflation
Can any of the company-specific risk be diversified away by investing in both SPDR SP and WisdomTree Inflation 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 WisdomTree Inflation 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 WisdomTree Inflation Plus, you can compare the effects of market volatilities on SPDR SP and WisdomTree Inflation 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 WisdomTree Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and WisdomTree Inflation.
Diversification Opportunities for SPDR SP and WisdomTree Inflation
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and WisdomTree is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and WisdomTree Inflation Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Inflation Plus 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 WisdomTree Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Inflation Plus has no effect on the direction of SPDR SP i.e., SPDR SP and WisdomTree Inflation go up and down completely randomly.
Pair Corralation between SPDR SP and WisdomTree Inflation
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 0.99 times more return on investment than WisdomTree Inflation. However, SPDR SP 500 is 1.01 times less risky than WisdomTree Inflation. It trades about 0.27 of its potential returns per unit of risk. WisdomTree Inflation Plus is currently generating about 0.06 per unit of risk. If you would invest 56,184 in SPDR SP 500 on May 3, 2025 and sell it today you would earn a total of 7,024 from holding SPDR SP 500 or generate 12.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 49.18% |
Values | Daily Returns |
SPDR SP 500 vs. WisdomTree Inflation Plus
Performance |
Timeline |
SPDR SP 500 |
WisdomTree Inflation Plus |
SPDR SP and WisdomTree Inflation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SP and WisdomTree Inflation
The main advantage of trading using opposite SPDR SP and WisdomTree Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, WisdomTree Inflation 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 WisdomTree Inflation will offset losses from the drop in WisdomTree Inflation's long position.SPDR SP vs. Vanguard SP 500 | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class | SPDR SP vs. Northern Lights |
WisdomTree Inflation vs. First Trust Dorsey | WisdomTree Inflation vs. Direxion Daily MSCI | WisdomTree Inflation vs. MFUT | WisdomTree Inflation vs. VanEck Morningstar Wide |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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