Correlation Between SPDR SP and Alpha Architect
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Alpha Architect 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 Alpha Architect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Pharmaceuticals and Alpha Architect International, you can compare the effects of market volatilities on SPDR SP and Alpha Architect 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 Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Alpha Architect.
Diversification Opportunities for SPDR SP and Alpha Architect
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Alpha is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Pharmaceuticals and Alpha Architect International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect Inte 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 Pharmaceuticals are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect Inte has no effect on the direction of SPDR SP i.e., SPDR SP and Alpha Architect go up and down completely randomly.
Pair Corralation between SPDR SP and Alpha Architect
Considering the 90-day investment horizon SPDR SP Pharmaceuticals is expected to generate 1.34 times more return on investment than Alpha Architect. However, SPDR SP is 1.34 times more volatile than Alpha Architect International. It trades about 0.18 of its potential returns per unit of risk. Alpha Architect International is currently generating about 0.17 per unit of risk. If you would invest 4,242 in SPDR SP Pharmaceuticals on July 22, 2025 and sell it today you would earn a total of 578.00 from holding SPDR SP Pharmaceuticals or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
SPDR SP Pharmaceuticals vs. Alpha Architect International
Performance |
| Timeline |
| SPDR SP Pharmaceuticals |
| Alpha Architect Inte |
SPDR SP and Alpha Architect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Alpha Architect
The main advantage of trading using opposite SPDR SP and Alpha Architect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Alpha Architect 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 Alpha Architect will offset losses from the drop in Alpha Architect's long position.| SPDR SP vs. SPDR SP Oil | SPDR SP vs. SPDR SP Telecom | SPDR SP vs. SPDR SP Transportation | SPDR SP vs. WisdomTree Europe SmallCap |
| Alpha Architect vs. Avantis Emerging Markets | Alpha Architect vs. Fidelity International High | Alpha Architect vs. First Trust Dorsey | Alpha Architect vs. KFA Mount Lucas |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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