Correlation Between SPDR SSGA and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SPDR SSGA and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SSGA Large and SPDR SP 1500, you can compare the effects of market volatilities on SPDR SSGA and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSGA and SPDR SP.
Diversification Opportunities for SPDR SSGA and SPDR SP
Almost no diversification
The 3 months correlation between SPDR and SPDR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSGA Large and SPDR SP 1500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 1500 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 Large are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 1500 has no effect on the direction of SPDR SSGA i.e., SPDR SSGA and SPDR SP go up and down completely randomly.
Pair Corralation between SPDR SSGA and SPDR SP
Given the investment horizon of 90 days SPDR SSGA is expected to generate 1.67 times less return on investment than SPDR SP. But when comparing it to its historical volatility, SPDR SSGA Large is 1.36 times less risky than SPDR SP. It trades about 0.19 of its potential returns per unit of risk. SPDR SP 1500 is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 18,509 in SPDR SP 1500 on August 25, 2024 and sell it today you would earn a total of 873.00 from holding SPDR SP 1500 or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SSGA Large vs. SPDR SP 1500
Performance |
| Timeline |
| SPDR SSGA Large |
| SPDR SP 1500 |
SPDR SSGA and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SSGA and SPDR SP
The main advantage of trading using opposite SPDR SSGA and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SSGA position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| SPDR SSGA vs. SPDR SSGA Small | SPDR SSGA vs. SPDR MSCI USA | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. Invesco SP SmallCap |
| SPDR SP vs. Freedom Day Dividend | SPDR SP vs. Davis Select International | SPDR SP vs. iShares MSCI China | SPDR SP vs. SmartETFs Dividend Builder |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Commodity Directory Find actively traded commodities issued by global exchanges |