Correlation Between Sp 500 and Target Managed

Can any of the company-specific risk be diversified away by investing in both Sp 500 and Target Managed 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 Sp 500 and Target Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sp 500 Index and Target Managed Allocation, you can compare the effects of market volatilities on Sp 500 and Target Managed 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 Sp 500 with a short position of Target Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and Target Managed.

Diversification Opportunities for Sp 500 and Target Managed

0.96

Correlation Coefficient

Sp 500  Target Managed

Almost no diversification

The 3 months correlation between USPRX and Target is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Index and Target Managed Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Managed Allocation and Sp 500 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 Sp 500 Index are associated (or correlated) with Target Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Managed Allocation has no effect on the direction of Sp 500 i.e., Sp 500 and Target Managed go up and down completely randomly.

Pair Corralation between Sp 500 and Target Managed

Assuming the 90 days horizon Sp 500 Index is expected to generate 1.53 times more return on investment than Target Managed. However, Sp 500 is 1.53 times more volatile than Target Managed Allocation. It trades about 0.34 of its potential returns per unit of risk. Target Managed Allocation is currently generating about 0.26 per unit of risk. If you would invest  6,825  in Sp 500 Index on April 24, 2025 and sell it today you would earn a total of  1,122  from holding Sp 500 Index or generate 16.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Sp 500 Index  vs.  Target Managed Allocation

Sp 500 Index

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sp 500 Index are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sp 500 showed solid returns over the last few months and may actually be approaching a breakup point.

Target Managed Allocation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Target Managed Allocation are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Target Managed may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Sp 500 and Target Managed

The main advantage of trading using opposite Sp 500 and Target Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 position performs unexpectedly, Target Managed 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 Target Managed will offset losses from the drop in Target Managed's long position.

The idea behind Sp 500 Index and Target Managed Allocation 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.