Latest Metrics: Top 10 Drivers of the S&P500 this Week
📶Decoding the S&P500 (07/02/24): | Asset Correlation Matrix | S&P500 Market Cycle Tracker | Alpha Hedge Performance Review
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Decoding the S&P500 Market Cycle and sharing the backstage here in the Wall Street Insider Report.
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S&P 500 DATA POINTS
Latest Metrics: Top 10 Drivers of the S&P 500 this Week
(07/02/2024 Update)
This graph compares the largest positive and negative Market Cap Variation in the S&P 500 in the last 7 days.
Over the past 7 days, Apple AAPL 0.00%↑, Tesla TSLA 0.00%↑, Amazon AMZN 0.00%↑, Microsoft MSFT 0.00%↑, and JPMorgan Chase JPM 0.00%↑ saw notable positive market cap variations in the S&P 500. Conversely, Nike NKE 0.00%↑, Visa V 0.00%↑, Mastercard MA 0.00%↑, Berkshire Hathaway $BRK.B , and Merck & Co. MRK 0.00%↑ experienced declines, with market caps decreasing by 0.06%, 0.04%, 0.04%, 0.03%, and 0.03% respectively.
The graph displays the performance distribution of S&P 500 stocks over the past 7 days. The horizontal and vertical axes represent the percentage change, with bubble sizes corresponding to market capitalization.
The S&P 500 index showed an overall positive change of +0.27%. Individual stock concentration performances ranged from a decline of -5.52% to a gain of +3.68%.
INSIDERS KNOWLEDGE HUB
Asset Correlation Matrix: A Practical Example
What is an Asset Correlation Matrix?
An asset correlation matrix is a table showing correlation coefficients between various assets in a portfolio. These coefficients range from -1 to 1:
1: Perfect positive correlation. When one asset goes up, the other goes up proportionally.
0: No correlation. The movement of one asset does not predict the movement of another.
-1: Perfect negative correlation. When one asset goes up, the other goes down proportionally.
By understanding these relationships, investors can build portfolios that balance risk and reward more effectively.
Practical Example: Correlation Statistics
From the image, we can extract two key pieces of information:
Correlation to S&P 500: 0.08410
The correlation coefficient of 0.08410 indicates that there is a very low correlation between the strategy and the S&P 500. This low correlation suggests that the hedge strategy performs independently of the S&P 500, particularly during past bear markets.
To compare with the presented correlation statistics from the Alpha Hedge Portfolio, let’s create an Asset Correlation Matrix using the site www.portfoliovisualizer.com:
The Asset Correlation Matrix illustrates the correlation of various asset classes to the S&P 500 SPY 0.00%↑ :
International stocks ACWX 0.00%↑
Real Estate VNQ 0.00%↑
Commodities GSG 0.00%↑
PERFORMANCE SNAPSHOT
S&P 500 Market Cycle Tracker:
(07/02/2024 Update)
Worried about S&P 500 Concentration? Here’s What Historical Data Tells
Recently released data from Standard and Poor's reveals that the US stock market has become the most concentrated in the past 150 years. As of June 30, 2024, the Top 10 stocks, including giants like Microsoft MSFT 0.00%↑, Apple AAPL 0.00%↑, and Nvidia NVDA 0.00%↑, now make up 35.77% of the S&P 500 SPY 0.00%↑.
This unprecedented concentration raises questions about market stability. However, analysis of historical trends suggests otherwise. In both 1955 and 1963, similar concentrations were followed by continued market rallies, indicating a likely spread of the bull market to the broader market.
The S&P 500 is currently in Phase 4 of the Market Cycle.
Alpha Hedge Performance Review
(07/02/2024 Update)
The Alpha Hedge Portfolio had a monthly gain of 1.9% and a YTD increase of 22.6%.
Over the past 34 months, the portfolio achieved a cumulative return of 44.41% (includes system fee and typical broker commissions and fees), significantly outperforming the S&P 500's 26.61% gain over the same period.
Over the past decade, our subscribers have outperformed the American Market Decoding the S&P 500 Market Cycle.
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