Correlation Between SSgA SPDR and Multi Units
Can any of the company-specific risk be diversified away by investing in both SSgA SPDR and Multi Units 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 SSgA SPDR and Multi Units into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSgA SPDR ETFs and Multi Units Luxembourg, you can compare the effects of market volatilities on SSgA SPDR and Multi Units 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 SSgA SPDR with a short position of Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and Multi Units.
Diversification Opportunities for SSgA SPDR and Multi Units
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SSgA and Multi is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg and SSgA SPDR 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 SSgA SPDR ETFs are associated (or correlated) with Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Multi Units go up and down completely randomly.
Pair Corralation between SSgA SPDR and Multi Units
Assuming the 90 days trading horizon SSgA SPDR is expected to generate 10.08 times less return on investment than Multi Units. But when comparing it to its historical volatility, SSgA SPDR ETFs is 4.43 times less risky than Multi Units. It trades about 0.25 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 18,754 in Multi Units Luxembourg on November 5, 2024 and sell it today you would earn a total of 2,776 from holding Multi Units Luxembourg or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSgA SPDR ETFs vs. Multi Units Luxembourg
Performance |
| Timeline |
| SSgA SPDR ETFs |
| Multi Units Luxembourg |
SSgA SPDR and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSgA SPDR and Multi Units
The main advantage of trading using opposite SSgA SPDR and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA SPDR position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' long position.| SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs |
| Multi Units vs. Multi Units Luxembourg | Multi Units vs. Multi Units Luxembourg | Multi Units vs. Multi Units France | Multi Units vs. Multi Units France |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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