Correlation Between SSGA Active and ALABAMA TAX
Can any of the company-specific risk be diversified away by investing in both SSGA Active and ALABAMA TAX 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 Active and ALABAMA TAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSGA Active Trust and ALABAMA TAX FREE BOND, you can compare the effects of market volatilities on SSGA Active and ALABAMA TAX 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 Active with a short position of ALABAMA TAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSGA Active and ALABAMA TAX.
Diversification Opportunities for SSGA Active and ALABAMA TAX
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between SSGA and ALABAMA is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and ALABAMA TAX FREE BOND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALABAMA TAX FREE and SSGA Active 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 Active Trust are associated (or correlated) with ALABAMA TAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALABAMA TAX FREE has no effect on the direction of SSGA Active i.e., SSGA Active and ALABAMA TAX go up and down completely randomly.
Pair Corralation between SSGA Active and ALABAMA TAX
Given the investment horizon of 90 days SSGA Active is expected to generate 2.24 times less return on investment than ALABAMA TAX. But when comparing it to its historical volatility, SSGA Active Trust is 3.61 times less risky than ALABAMA TAX. It trades about 0.09 of its potential returns per unit of risk. ALABAMA TAX FREE BOND is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,107 in ALABAMA TAX FREE BOND on September 12, 2024 and sell it today you would earn a total of 154.00 from holding ALABAMA TAX FREE BOND or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSGA Active Trust vs. ALABAMA TAX FREE BOND
Performance |
| Timeline |
| SSGA Active Trust |
| ALABAMA TAX FREE |
SSGA Active and ALABAMA TAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSGA Active and ALABAMA TAX
The main advantage of trading using opposite SSGA Active and ALABAMA TAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSGA Active position performs unexpectedly, ALABAMA TAX 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 ALABAMA TAX will offset losses from the drop in ALABAMA TAX's long position.| SSGA Active vs. BlackRock Intermediate Muni | SSGA Active vs. SSGA Active Trust | SSGA Active vs. SPDR MarketAxess Investment | SSGA Active vs. SSGA Active Trust |
| ALABAMA TAX vs. FT Vest Equity | ALABAMA TAX vs. Zillow Group Class | ALABAMA TAX vs. Northern Lights | ALABAMA TAX vs. VanEck Vectors Moodys |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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