Correlation Between SPDR SP and JPMorgan BetaBuilders

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

By analyzing existing cross correlation between SPDR SP Emerging and JPMorgan BetaBuilders Developed, you can compare the effects of market volatilities on SPDR SP and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and JPMorgan BetaBuilders.

Diversification Opportunities for SPDR SP and JPMorgan BetaBuilders

0.39

Correlation Coefficient

SPDR SP  JPMorgan BetaBuilders

Weak diversification

The 3 months correlation between SPDR and JPMorgan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Emerging and JPMorgan BetaBuilders Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders 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 Emerging are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of SPDR SP i.e., SPDR SP and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between SPDR SP and JPMorgan BetaBuilders

Considering the 90-day investment horizon SPDR SP Emerging is expected to generate 0.83 times more return on investment than JPMorgan BetaBuilders. However, SPDR SP Emerging is 1.21 times less risky than JPMorgan BetaBuilders. It trades about 0.15 of its potential returns per unit of risk. JPMorgan BetaBuilders Developed is currently generating about 0.01 per unit of risk. If you would invest  10,505  in SPDR SP Emerging on February 6, 2024 and sell it today you would earn a total of  323.00  from holding SPDR SP Emerging or generate 3.07% return on investment over 90 days.

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

SPDR SP Emerging  vs.  JPMorgan BetaBuilders Develope

SPDR SP Emerging

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Emerging are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in June 2024.

JPMorgan BetaBuilders

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Developed are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, JPMorgan BetaBuilders 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 JPMorgan BetaBuilders

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

The idea behind SPDR SP Emerging and JPMorgan BetaBuilders Developed 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 Commodity Directory module to find actively traded commodities issued by global exchanges.