Correlation Between SPDR SP and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SSgA SPDR 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 SP and SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and SSgA SPDR ETFs, you can compare the effects of market volatilities on SPDR SP and SSgA SPDR 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 SP with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SSgA SPDR.
Diversification Opportunities for SPDR SP and SSgA SPDR
Almost no diversification
The 3 months correlation between SPDR and SSgA is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and SPDR SP 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 SP 500 are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of SPDR SP i.e., SPDR SP and SSgA SPDR go up and down completely randomly.
Pair Corralation between SPDR SP and SSgA SPDR
Assuming the 90 days trading horizon SPDR SP is expected to generate 1.82 times less return on investment than SSgA SPDR. But when comparing it to its historical volatility, SPDR SP 500 is 1.74 times less risky than SSgA SPDR. It trades about 0.25 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5,961 in SSgA SPDR ETFs on August 29, 2024 and sell it today you would earn a total of 714.00 from holding SSgA SPDR ETFs or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. SSgA SPDR ETFs
Performance |
| Timeline |
| SPDR SP 500 |
| SSgA SPDR ETFs |
SPDR SP and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SSgA SPDR
The main advantage of trading using opposite SPDR SP and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR Barclays Cap | SPDR SP vs. SPDR MSCI Europe |
| SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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