Correlation Between SPDR SSGA and SPDR SSGA

Can any of the company-specific risk be diversified away by investing in both SPDR SSGA and SPDR SSGA 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 SSGA and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR SSGA Small and SPDR SSGA Large, you can compare the effects of market volatilities on SPDR SSGA and SPDR SSGA 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 SSGA with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSGA and SPDR SSGA.

Diversification Opportunities for SPDR SSGA and SPDR SSGA

0.69

Correlation Coefficient

SPDR SSGA  SPDR SSGA

Poor diversification

The 3 months correlation between SPDR and SPDR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSGA Small and SPDR SSGA Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Large and SPDR SSGA 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 SSGA Small are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Large has no effect on the direction of SPDR SSGA i.e., SPDR SSGA and SPDR SSGA go up and down completely randomly.

Pair Corralation between SPDR SSGA and SPDR SSGA

Given the investment horizon of 90 days SPDR SSGA Small is expected to generate 1.82 times more return on investment than SPDR SSGA. However, SPDR SSGA is 1.82 times more volatile than SPDR SSGA Large. It trades about 0.03 of its potential returns per unit of risk. SPDR SSGA Large is currently generating about -0.02 per unit of risk. If you would invest  10,833  in SPDR SSGA Small on March 3, 2024 and sell it today you would earn a total of  178.00  from holding SPDR SSGA Small or generate 1.64% return on investment over 90 days.

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

SPDR SSGA Small  vs.  SPDR SSGA Large

SPDR SSGA Small

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA Small are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, SPDR SSGA is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SPDR SSGA Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SSGA Large has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, SPDR SSGA is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SPDR SSGA and SPDR SSGA

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

The idea behind SPDR SSGA Small and SPDR SSGA Large 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.