Correlation Between SSgA SPDR and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both SSgA SPDR and BNP Paribas 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 BNP Paribas 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 BNP Paribas Easy, you can compare the effects of market volatilities on SSgA SPDR and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and BNP Paribas.
Diversification Opportunities for SSgA SPDR and BNP Paribas
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SSgA and BNP is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and BNP Paribas go up and down completely randomly.
Pair Corralation between SSgA SPDR and BNP Paribas
Assuming the 90 days trading horizon SSgA SPDR ETFs is expected to generate 4.48 times more return on investment than BNP Paribas. However, SSgA SPDR is 4.48 times more volatile than BNP Paribas Easy. It trades about 0.07 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about 0.26 per unit of risk. If you would invest 4,948 in SSgA SPDR ETFs on September 1, 2024 and sell it today you would earn a total of 288.00 from holding SSgA SPDR ETFs or generate 5.82% 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. BNP Paribas Easy
Performance |
| Timeline |
| SSgA SPDR ETFs |
| BNP Paribas Easy |
SSgA SPDR and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSgA SPDR and BNP Paribas
The main advantage of trading using opposite SSgA SPDR and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA SPDR position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' 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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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