Correlation Between Sp 500 and World Growth

Can any of the company-specific risk be diversified away by investing in both Sp 500 and World Growth 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 World Growth 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 World Growth Fund, you can compare the effects of market volatilities on Sp 500 and World Growth 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 World Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and World Growth.

Diversification Opportunities for Sp 500 and World Growth

0.99

Correlation Coefficient

Sp 500  World Growth

No risk reduction

The 3 months correlation between USSPX and World is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Index and World Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Growth 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 World Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Growth has no effect on the direction of Sp 500 i.e., Sp 500 and World Growth go up and down completely randomly.

Pair Corralation between Sp 500 and World Growth

Assuming the 90 days horizon Sp 500 Index is expected to generate 1.0 times more return on investment than World Growth. However, Sp 500 Index is 1.0 times less risky than World Growth. It trades about 0.2 of its potential returns per unit of risk. World Growth Fund is currently generating about 0.16 per unit of risk. If you would invest  7,822  in Sp 500 Index on July 3, 2025 and sell it today you would earn a total of  558.00  from holding Sp 500 Index or generate 7.13% 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.  World Growth Fund

Sp 500 Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sp 500 Index are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sp 500 may actually be approaching a critical reversion point that can send shares even higher in November 2025.

World Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in World Growth Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, World Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sp 500 and World Growth

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

The idea behind Sp 500 Index and World Growth Fund 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.