Correlation Between SPDR SP and AFC Energy
Can any of the company-specific risk be diversified away by investing in both SPDR SP and AFC Energy 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 AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Materials and AFC Energy plc, you can compare the effects of market volatilities on SPDR SP and AFC Energy 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 AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and AFC Energy.
Diversification Opportunities for SPDR SP and AFC Energy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and AFC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Materials and AFC Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Energy plc 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 Materials are associated (or correlated) with AFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Energy plc has no effect on the direction of SPDR SP i.e., SPDR SP and AFC Energy go up and down completely randomly.
Pair Corralation between SPDR SP and AFC Energy
Assuming the 90 days trading horizon SPDR SP Materials is expected to generate 0.3 times more return on investment than AFC Energy. However, SPDR SP Materials is 3.3 times less risky than AFC Energy. It trades about -0.04 of its potential returns per unit of risk. AFC Energy plc is currently generating about -0.02 per unit of risk. If you would invest 4,474 in SPDR SP Materials on August 14, 2025 and sell it today you would lose (108.00) from holding SPDR SP Materials or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Materials vs. AFC Energy plc
Performance |
| Timeline |
| SPDR SP Materials |
| AFC Energy plc |
SPDR SP and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and AFC Energy
The main advantage of trading using opposite SPDR SP and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, AFC Energy 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 AFC Energy will offset losses from the drop in AFC Energy's long position.| SPDR SP vs. SPDR Dow Jones | SPDR SP vs. SPDR SP Dividend | SPDR SP vs. SPDR Barclays Euro | SPDR SP vs. SPDR SP Consumer |
| AFC Energy vs. Odfjell Drilling | AFC Energy vs. Lundin Mining Corp | AFC Energy vs. Ross Stores | AFC Energy vs. Anglo Asian Mining |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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