Correlation Between SPDR SSgA and Principal Active
Can any of the company-specific risk be diversified away by investing in both SPDR SSgA and Principal 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 SPDR SSgA and Principal Active 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 Principal Active High, you can compare the effects of market volatilities on SPDR SSgA and Principal 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 SPDR SSgA with a short position of Principal Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSgA and Principal Active.
Diversification Opportunities for SPDR SSgA and Principal Active
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and Principal is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Income and Principal Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Active High 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 Principal Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Active High has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and Principal Active go up and down completely randomly.
Pair Corralation between SPDR SSgA and Principal Active
Given the investment horizon of 90 days SPDR SSgA Income is expected to generate 0.97 times more return on investment than Principal Active. However, SPDR SSgA Income is 1.03 times less risky than Principal Active. It trades about 0.17 of its potential returns per unit of risk. Principal Active High is currently generating about 0.14 per unit of risk. If you would invest 3,032 in SPDR SSgA Income on September 13, 2024 and sell it today you would earn a total of 222.00 from holding SPDR SSgA Income or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
SPDR SSgA Income vs. Principal Active High
Performance |
| Timeline |
| SPDR SSgA Income |
| Principal Active High |
SPDR SSgA and Principal Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SSgA and Principal Active
The main advantage of trading using opposite SPDR SSgA and Principal Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SSgA position performs unexpectedly, Principal 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 Principal Active will offset losses from the drop in Principal Active's long position.| SPDR SSgA vs. First Trust Multi Asset | SPDR SSgA vs. Collaborative Investment Series | SPDR SSgA vs. EA Series Trust | SPDR SSgA vs. Aptus Defined Risk |
| Principal Active vs. SPDR SSgA Income | Principal Active vs. First Trust Income | Principal Active vs. Saba Closed End Funds | Principal Active vs. Xtrackers Short Duration |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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