Correlation Between SPDR SSgA and ProShares Short
Can any of the company-specific risk be diversified away by investing in both SPDR SSgA and ProShares Short 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 SPDR SSgA and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SSgA Multi Asset and ProShares Short 7 10, you can compare the effects of market volatilities on SPDR SSgA and ProShares Short 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 SPDR SSgA with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSgA and ProShares Short.
Diversification Opportunities for SPDR SSgA and ProShares Short
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and ProShares is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Multi Asset and ProShares Short 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short 7 and SPDR SSgA 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 SPDR SSgA Multi Asset are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short 7 has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and ProShares Short go up and down completely randomly.
Pair Corralation between SPDR SSgA and ProShares Short
Considering the 90-day investment horizon SPDR SSgA Multi Asset is expected to generate 1.35 times more return on investment than ProShares Short. However, SPDR SSgA is 1.35 times more volatile than ProShares Short 7 10. It trades about -0.09 of its potential returns per unit of risk. ProShares Short 7 10 is currently generating about -0.17 per unit of risk. If you would invest 2,806 in SPDR SSgA Multi Asset on December 6, 2024 and sell it today you would lose (31.00) from holding SPDR SSgA Multi Asset or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SSgA Multi Asset vs. ProShares Short 7 10
Performance |
| Timeline |
| SPDR SSgA Multi |
| ProShares Short 7 |
SPDR SSgA and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SSgA and ProShares Short
The main advantage of trading using opposite SPDR SSgA and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SSgA position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| SPDR SSgA vs. SPDR SSgA Global | ||
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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