Correlation Between SSGA Active and First Trust
Can any of the company-specific risk be diversified away by investing in both SSGA Active and First Trust 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 First Trust 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 First Trust High, you can compare the effects of market volatilities on SSGA Active and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSGA Active and First Trust.
Diversification Opportunities for SSGA Active and First Trust
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SSGA and First is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and First Trust High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust High 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust High has no effect on the direction of SSGA Active i.e., SSGA Active and First Trust go up and down completely randomly.
Pair Corralation between SSGA Active and First Trust
Given the investment horizon of 90 days SSGA Active Trust is expected to generate 0.91 times more return on investment than First Trust. However, SSGA Active Trust is 1.1 times less risky than First Trust. It trades about 0.09 of its potential returns per unit of risk. First Trust High is currently generating about 0.06 per unit of risk. If you would invest 2,313 in SSGA Active Trust on September 3, 2024 and sell it today you would earn a total of 308.00 from holding SSGA Active Trust or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSGA Active Trust vs. First Trust High
Performance |
| Timeline |
| SSGA Active Trust |
| First Trust High |
SSGA Active and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSGA Active and First Trust
The main advantage of trading using opposite SSGA Active and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSGA Active position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| SSGA Active vs. SPDR Bloomberg Barclays | SSGA Active vs. SPDR SSGA Fixed | SSGA Active vs. SPDR DoubleLine Short | SSGA Active vs. SPDR Portfolio Corporate |
| First Trust vs. First Trust Low | First Trust vs. First Trust Emerging | First Trust vs. First Trust TCW | First Trust vs. First Trust Alternative |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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