Correlation Between Capital Group and SSGA Active
Can any of the company-specific risk be diversified away by investing in both Capital Group and SSGA Active 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 Capital Group and SSGA Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Group Core and SSGA Active Trust, you can compare the effects of market volatilities on Capital Group and SSGA Active 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 Capital Group with a short position of SSGA Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and SSGA Active.
Diversification Opportunities for Capital Group and SSGA Active
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and SSGA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Core and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust and Capital Group 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 Capital Group Core are associated (or correlated) with SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of Capital Group i.e., Capital Group and SSGA Active go up and down completely randomly.
Pair Corralation between Capital Group and SSGA Active
Given the investment horizon of 90 days Capital Group Core is expected to generate 1.29 times more return on investment than SSGA Active. However, Capital Group is 1.29 times more volatile than SSGA Active Trust. It trades about 0.11 of its potential returns per unit of risk. SSGA Active Trust is currently generating about 0.13 per unit of risk. If you would invest 2,246 in Capital Group Core on August 31, 2024 and sell it today you would earn a total of 17.00 from holding Capital Group Core or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Group Core vs. SSGA Active Trust
Performance |
| Timeline |
| Capital Group Core |
| SSGA Active Trust |
Capital Group and SSGA Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Group and SSGA Active
The main advantage of trading using opposite Capital Group and SSGA Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group position performs unexpectedly, SSGA Active 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 SSGA Active will offset losses from the drop in SSGA Active's long position.| Capital Group vs. SSGA Active Trust | Capital Group vs. BlackRock Intermediate Muni | Capital Group vs. iShares BBB Rated | Capital Group vs. Xtrackers Short Duration |
| SSGA Active vs. SPDR Bloomberg Barclays | SSGA Active vs. SPDR SSGA Fixed | SSGA Active vs. SPDR DoubleLine Short | SSGA Active vs. SPDR Portfolio Corporate |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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