Correlation Between SPDR SSgA and Alpha Architect
Can any of the company-specific risk be diversified away by investing in both SPDR SSgA and Alpha Architect 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 SSgA and Alpha Architect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SSgA Income and Alpha Architect Gdsdn, you can compare the effects of market volatilities on SPDR SSgA and Alpha Architect 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 SSgA with a short position of Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSgA and Alpha Architect.
Diversification Opportunities for SPDR SSgA and Alpha Architect
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and Alpha is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Income and Alpha Architect Gdsdn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect Gdsdn and SPDR SSgA 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 SSgA Income are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect Gdsdn has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and Alpha Architect go up and down completely randomly.
Pair Corralation between SPDR SSgA and Alpha Architect
Given the investment horizon of 90 days SPDR SSgA is expected to generate 3.34 times less return on investment than Alpha Architect. But when comparing it to its historical volatility, SPDR SSgA Income is 1.6 times less risky than Alpha Architect. It trades about 0.06 of its potential returns per unit of risk. Alpha Architect Gdsdn is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,251 in Alpha Architect Gdsdn on August 24, 2024 and sell it today you would earn a total of 44.00 from holding Alpha Architect Gdsdn or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SSgA Income vs. Alpha Architect Gdsdn
Performance |
| Timeline |
| SPDR SSgA Income |
| Alpha Architect Gdsdn |
SPDR SSgA and Alpha Architect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SSgA and Alpha Architect
The main advantage of trading using opposite SPDR SSgA and Alpha Architect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SSgA position performs unexpectedly, Alpha Architect 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 Alpha Architect will offset losses from the drop in Alpha Architect's long position.| SPDR SSgA vs. First Trust Multi Asset | SPDR SSgA vs. Collaborative Investment Series | SPDR SSgA vs. Akros Monthly Payout | SPDR SSgA vs. Northern Lights |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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