Correlation Between SPDR SP and Manitou BF

Can any of the company-specific risk be diversified away by investing in both SPDR SP and Manitou BF 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 Manitou BF 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 Manitou BF SA, you can compare the effects of market volatilities on SPDR SP and Manitou BF 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 Manitou BF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Manitou BF.

Diversification Opportunities for SPDR SP and Manitou BF

-0.16

Correlation Coefficient

SPDR SP  Manitou BF

Good diversification

The 3 months correlation between SPDR and Manitou is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Manitou BF SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitou BF SA 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 Manitou BF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitou BF SA has no effect on the direction of SPDR SP i.e., SPDR SP and Manitou BF go up and down completely randomly.

Pair Corralation between SPDR SP and Manitou BF

Assuming the 90 days trading horizon SPDR SP is expected to generate 1.02 times less return on investment than Manitou BF. But when comparing it to its historical volatility, SPDR SP 500 is 6.92 times less risky than Manitou BF. It trades about 0.35 of its potential returns per unit of risk. Manitou BF SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,317  in Manitou BF SA on April 7, 2024 and sell it today you would earn a total of  113.00  from holding Manitou BF SA or generate 4.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SPDR SP 500  vs.  Manitou BF SA

SPDR SP 500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in August 2024.

Manitou BF SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Manitou BF 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 Manitou BF

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

The idea behind SPDR SP 500 and Manitou BF SA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.