Correlation Between SSGA Active and IShares National
Can any of the company-specific risk be diversified away by investing in both SSGA Active and IShares National 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 IShares National 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 iShares National Muni, you can compare the effects of market volatilities on SSGA Active and IShares National 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 IShares National. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSGA Active and IShares National.
Diversification Opportunities for SSGA Active and IShares National
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SSGA and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and iShares National Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares National Muni 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 IShares National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares National Muni has no effect on the direction of SSGA Active i.e., SSGA Active and IShares National go up and down completely randomly.
Pair Corralation between SSGA Active and IShares National
Given the investment horizon of 90 days SSGA Active Trust is expected to generate 1.03 times more return on investment than IShares National. However, SSGA Active is 1.03 times more volatile than iShares National Muni. It trades about 0.09 of its potential returns per unit of risk. iShares National Muni is currently generating about 0.05 per unit of risk. If you would invest 2,297 in SSGA Active Trust on August 26, 2024 and sell it today you would earn a total of 301.00 from holding SSGA Active Trust or generate 13.1% 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. iShares National Muni
Performance |
| Timeline |
| SSGA Active Trust |
| iShares National Muni |
SSGA Active and IShares National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSGA Active and IShares National
The main advantage of trading using opposite SSGA Active and IShares National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSGA Active position performs unexpectedly, IShares National 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 IShares National will offset losses from the drop in IShares National'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 |
| IShares National vs. BlackRock Intermediate Muni | IShares National vs. SSGA Active Trust | IShares National vs. SPDR MarketAxess Investment | IShares National 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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