Correlation Between SSGA Active and Avantis Core
Can any of the company-specific risk be diversified away by investing in both SSGA Active and Avantis Core 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 Avantis Core 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 Avantis Core Municipal, you can compare the effects of market volatilities on SSGA Active and Avantis Core 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 Avantis Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSGA Active and Avantis Core.
Diversification Opportunities for SSGA Active and Avantis Core
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SSGA and Avantis is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and Avantis Core Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Core Municipal 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 Avantis Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Core Municipal has no effect on the direction of SSGA Active i.e., SSGA Active and Avantis Core go up and down completely randomly.
Pair Corralation between SSGA Active and Avantis Core
Given the investment horizon of 90 days SSGA Active is expected to generate 2.24 times less return on investment than Avantis Core. But when comparing it to its historical volatility, SSGA Active Trust is 1.5 times less risky than Avantis Core. It trades about 0.12 of its potential returns per unit of risk. Avantis Core Municipal is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,612 in Avantis Core Municipal on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Avantis Core Municipal or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSGA Active Trust vs. Avantis Core Municipal
Performance |
| Timeline |
| SSGA Active Trust |
| Avantis Core Municipal |
SSGA Active and Avantis Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSGA Active and Avantis Core
The main advantage of trading using opposite SSGA Active and Avantis Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSGA Active position performs unexpectedly, Avantis Core 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 Avantis Core will offset losses from the drop in Avantis Core's long position.| SSGA Active vs. WisdomTree Interest Rate | SSGA Active vs. WisdomTree SmallCap Quality | SSGA Active vs. WisdomTree Emerging Markets | SSGA Active vs. WisdomTree Emerging Markets |
| Avantis Core vs. Avantis Core Fixed | Avantis Core vs. American Century ETF | Avantis Core vs. American Century Diversified | Avantis Core vs. IQ MacKay Municipal |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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