Correlation Between American Sierra and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both American Sierra 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 American Sierra and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Sierra Gold and SPDR SSGA Small, you can compare the effects of market volatilities on American Sierra 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 American Sierra with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Sierra and SPDR SSGA.
Diversification Opportunities for American Sierra and SPDR SSGA
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and SPDR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Sierra Gold and SPDR SSGA Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Small and American Sierra 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 American Sierra Gold 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 Small has no effect on the direction of American Sierra i.e., American Sierra and SPDR SSGA go up and down completely randomly.
Pair Corralation between American Sierra and SPDR SSGA
Given the investment horizon of 90 days American Sierra Gold is expected to generate 7.36 times more return on investment than SPDR SSGA. However, American Sierra is 7.36 times more volatile than SPDR SSGA Small. It trades about 0.02 of its potential returns per unit of risk. SPDR SSGA Small is currently generating about 0.12 per unit of risk. If you would invest 0.50 in American Sierra Gold on September 13, 2024 and sell it today you would lose (0.10) from holding American Sierra Gold or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
American Sierra Gold vs. SPDR SSGA Small
Performance |
| Timeline |
| American Sierra Gold |
| SPDR SSGA Small |
American Sierra and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Sierra and SPDR SSGA
The main advantage of trading using opposite American Sierra and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Sierra 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.| American Sierra vs. Arctic Star Exploration | American Sierra vs. American Clean Resources | American Sierra vs. American Creek Resources | American Sierra vs. Arras Minerals Corp |
| SPDR SSGA vs. SPDR SSGA Large | SPDR SSGA vs. Invesco SP SmallCap | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. SPDR MSCI EAFE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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