Correlation Between SSGA Active and SPDR MarketAxess
Can any of the company-specific risk be diversified away by investing in both SSGA Active and SPDR MarketAxess 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 SPDR MarketAxess 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 SPDR MarketAxess Investment, you can compare the effects of market volatilities on SSGA Active and SPDR MarketAxess 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 SPDR MarketAxess. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSGA Active and SPDR MarketAxess.
Diversification Opportunities for SSGA Active and SPDR MarketAxess
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SSGA and SPDR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and SPDR MarketAxess Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MarketAxess Inv 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 SPDR MarketAxess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MarketAxess Inv has no effect on the direction of SSGA Active i.e., SSGA Active and SPDR MarketAxess go up and down completely randomly.
Pair Corralation between SSGA Active and SPDR MarketAxess
Given the investment horizon of 90 days SSGA Active Trust is expected to generate 0.54 times more return on investment than SPDR MarketAxess. However, SSGA Active Trust is 1.84 times less risky than SPDR MarketAxess. It trades about 0.12 of its potential returns per unit of risk. SPDR MarketAxess Investment is currently generating about 0.05 per unit of risk. If you would invest 2,327 in SSGA Active Trust on August 30, 2024 and sell it today you would earn a total of 287.00 from holding SSGA Active Trust or generate 12.33% 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. SPDR MarketAxess Investment
Performance |
| Timeline |
| SSGA Active Trust |
| SPDR MarketAxess Inv |
SSGA Active and SPDR MarketAxess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSGA Active and SPDR MarketAxess
The main advantage of trading using opposite SSGA Active and SPDR MarketAxess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSGA Active position performs unexpectedly, SPDR MarketAxess 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 MarketAxess will offset losses from the drop in SPDR MarketAxess' 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 |
| SPDR MarketAxess vs. SSGA Active Trust | SPDR MarketAxess vs. SPDR Series Trust | SPDR MarketAxess vs. SPDR Bloomberg Barclays | SPDR MarketAxess vs. SSGA Active Trust |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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