Correlation Between SPDR SSGA and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SPDR 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 SPDR 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 SPDR SSGA Small and SPDR SP 1500, you can compare the effects of market volatilities on SPDR 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 SPDR SSGA with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSGA and SPDR SP.
Diversification Opportunities for SPDR SSGA and SPDR SP
Very poor diversification
The 3 months correlation between SPDR and SPDR is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSGA Small and SPDR SP 1500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 1500 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 Small 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 1500 has no effect on the direction of SPDR SSGA i.e., SPDR SSGA and SPDR SP go up and down completely randomly.
Pair Corralation between SPDR SSGA and SPDR SP
Given the investment horizon of 90 days SPDR SSGA is expected to generate 1.34 times less return on investment than SPDR SP. In addition to that, SPDR SSGA is 1.66 times more volatile than SPDR SP 1500. It trades about 0.04 of its total potential returns per unit of risk. SPDR SP 1500 is currently generating about 0.09 per unit of volatility. If you would invest 13,709 in SPDR SP 1500 on November 27, 2024 and sell it today you would earn a total of 5,361 from holding SPDR SP 1500 or generate 39.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SSGA Small vs. SPDR SP 1500
Performance |
| Timeline |
| SPDR SSGA Small |
| SPDR SP 1500 |
SPDR SSGA and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SSGA and SPDR SP
The main advantage of trading using opposite SPDR SSGA and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR 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.| SPDR SSGA vs. SPDR SSGA Large | SPDR SSGA vs. Invesco SP SmallCap | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. SPDR MSCI EAFE |
| SPDR SP vs. Davis Select International | SPDR SP vs. Principal Value ETF | SPDR SP vs. WisdomTree Emerging Markets | SPDR SP vs. Ballast SmallMid Cap |
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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