Correlation Between MicroSectors Solactive and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both MicroSectors Solactive 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 MicroSectors Solactive and SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors Solactive FANG and SPDR Kensho Intelligent, you can compare the effects of market volatilities on MicroSectors Solactive 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 MicroSectors Solactive with a short position of SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Solactive and SPDR Kensho.
Diversification Opportunities for MicroSectors Solactive and SPDR Kensho
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MicroSectors and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Solactive FANG 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 MicroSectors Solactive 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 MicroSectors Solactive FANG 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 MicroSectors Solactive i.e., MicroSectors Solactive and SPDR Kensho go up and down completely randomly.
Pair Corralation between MicroSectors Solactive and SPDR Kensho
Given the investment horizon of 90 days MicroSectors Solactive FANG is expected to generate 2.52 times more return on investment than SPDR Kensho. However, MicroSectors Solactive is 2.52 times more volatile than SPDR Kensho Intelligent. It trades about 0.18 of its potential returns per unit of risk. SPDR Kensho Intelligent is currently generating about 0.21 per unit of risk. If you would invest 19,001 in MicroSectors Solactive FANG on July 26, 2025 and sell it today you would earn a total of 8,980 from holding MicroSectors Solactive FANG or generate 47.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors Solactive FANG vs. SPDR Kensho Intelligent
Performance |
| Timeline |
| MicroSectors Solactive |
| SPDR Kensho Intelligent |
MicroSectors Solactive and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors Solactive and SPDR Kensho
The main advantage of trading using opposite MicroSectors Solactive and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors Solactive 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.| MicroSectors Solactive vs. T Rowe Price | MicroSectors Solactive vs. JPMorgan Momentum Factor | MicroSectors Solactive vs. iShares Utilities ETF | MicroSectors Solactive vs. SP Funds SP |
| SPDR Kensho vs. SPDR STOXX Europe | SPDR Kensho vs. SPDR Bloomberg Barclays | SPDR Kensho vs. SPDR Kensho Future | SPDR Kensho vs. SPDR SP Kensho |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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