Correlation Between SPDR SP and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SP 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 SP 500 and SPDR SSGA Large, you can compare the effects of market volatilities on SPDR SP 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 SP with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SPDR SSGA.
Diversification Opportunities for SPDR SP and SPDR SSGA
Poor diversification
The 3 months correlation between SPDR and SPDR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 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 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 500 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 SP i.e., SPDR SP and SPDR SSGA go up and down completely randomly.
Pair Corralation between SPDR SP and SPDR SSGA
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 0.82 times more return on investment than SPDR SSGA. However, SPDR SP 500 is 1.22 times less risky than SPDR SSGA. It trades about 0.32 of its potential returns per unit of risk. SPDR SSGA Large is currently generating about -0.05 per unit of risk. If you would invest 53,006 in SPDR SP 500 on March 21, 2024 and sell it today you would earn a total of 1,843 from holding SPDR SP 500 or generate 3.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR SP 500 vs. SPDR SSGA Large
Performance |
Timeline |
SPDR SP 500 |
SPDR SSGA Large |
SPDR SP and SPDR SSGA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SP and SPDR SSGA
The main advantage of trading using opposite SPDR SP and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.SPDR SP vs. iShares ESG Advanced | SPDR SP vs. SPDR SP 500 | SPDR SP vs. HUMANA INC | SPDR SP vs. Franklin Strategic Mortgage |
SPDR SSGA vs. iShares ESG Advanced | SPDR SSGA vs. SPDR SP 500 | SPDR SSGA vs. HUMANA INC | SPDR SSGA vs. Franklin Strategic Mortgage |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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