Correlation Between Communication Services and SPDR Kensho

Can any of the company-specific risk be diversified away by investing in both Communication Services and SPDR Kensho 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 Communication Services and SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Communication Services Select and SPDR Kensho Intelligent, you can compare the effects of market volatilities on Communication Services and SPDR Kensho 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 Communication Services with a short position of SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Services and SPDR Kensho.

Diversification Opportunities for Communication Services and SPDR Kensho

0.31

Correlation Coefficient

Communication Services  SPDR Kensho

Weak diversification

The 3 months correlation between Communication and SPDR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Communication Services Select and SPDR Kensho Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Intelligent and Communication Services 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 Communication Services Select are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Intelligent has no effect on the direction of Communication Services i.e., Communication Services and SPDR Kensho go up and down completely randomly.

Pair Corralation between Communication Services and SPDR Kensho

Considering the 90-day investment horizon Communication Services is expected to generate 10.41 times less return on investment than SPDR Kensho. But when comparing it to its historical volatility, Communication Services Select is 2.35 times less risky than SPDR Kensho. It trades about 0.02 of its potential returns per unit of risk. SPDR Kensho Intelligent is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,887  in SPDR Kensho Intelligent on August 17, 2025 and sell it today you would earn a total of  390.00  from holding SPDR Kensho Intelligent or generate 10.03% return on investment over 90 days.

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

Communication Services Select  vs.  SPDR Kensho Intelligent

Communication Services

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Communication Services Select are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Communication Services is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR Kensho Intelligent

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho Intelligent are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, SPDR Kensho may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Communication Services and SPDR Kensho

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

The idea behind Communication Services Select and SPDR Kensho Intelligent 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.