Correlation Between Ssga International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Ssga International and Dow Jones 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 International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssga International Stock and Dow Jones Industrial, you can compare the effects of market volatilities on Ssga International and Dow Jones 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 International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssga International and Dow Jones.
Diversification Opportunities for Ssga International and Dow Jones
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SSGA and Dow is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ssga International Stock and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Ssga International 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 International Stock are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Ssga International i.e., Ssga International and Dow Jones go up and down completely randomly.
Pair Corralation between Ssga International and Dow Jones
Assuming the 90 days horizon Ssga International Stock is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ssga International Stock is 1.36 times less risky than Dow Jones. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 233,449 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssga International Stock vs. Dow Jones Industrial
Performance |
| Timeline |
Ssga International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Ssga International Stock
Pair trading matchups for Ssga International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Ssga International and Dow Jones
The main advantage of trading using opposite Ssga International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssga International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Ssga International vs. Lord Abbett High | Ssga International vs. Prudential High Yield | Ssga International vs. Dunham High Yield | Ssga International vs. Artisan High Income |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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