Correlation Between SSgA and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SSgA and SPDR SP 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 and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSgA and SPDR SP 600, you can compare the effects of market volatilities on SSgA and SPDR SP 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 with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA and SPDR SP.
Diversification Opportunities for SSgA and SPDR SP
Average diversification
The 3 months correlation between SSgA and SPDR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SSgA and SPDR SP 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 600 and 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 SSgA are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 600 has no effect on the direction of SSgA i.e., SSgA and SPDR SP go up and down completely randomly.
Pair Corralation between SSgA and SPDR SP
If you would invest 7,394 in SPDR SP 600 on August 26, 2024 and sell it today you would earn a total of 2,508 from holding SPDR SP 600 or generate 33.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
SSgA vs. SPDR SP 600
Performance |
| Timeline |
| SSgA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SPDR SP 600 |
SSgA and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSgA and SPDR SP
The main advantage of trading using opposite SSgA and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.The idea behind SSgA and SPDR SP 600 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SPDR SP vs. SPDR SP 600 | SPDR SP vs. SPDR SP 400 | SPDR SP vs. SPDR SP 400 | SPDR SP vs. Invesco SP SmallCap |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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