Correlation Between SSgA SPDR and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SSgA SPDR 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 SPDR 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 SPDR ETFs and SPDR SP 500, you can compare the effects of market volatilities on SSgA SPDR 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 SPDR with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and SPDR SP.
Diversification Opportunities for SSgA SPDR and SPDR SP
Poor diversification
The 3 months correlation between SSgA and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and SSgA SPDR 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 SPDR ETFs 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 500 has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and SPDR SP go up and down completely randomly.
Pair Corralation between SSgA SPDR and SPDR SP
Assuming the 90 days trading horizon SSgA SPDR is expected to generate 1.4 times less return on investment than SPDR SP. In addition to that, SSgA SPDR is 1.09 times more volatile than SPDR SP 500. It trades about 0.11 of its total potential returns per unit of risk. SPDR SP 500 is currently generating about 0.17 per unit of volatility. If you would invest 42,619 in SPDR SP 500 on August 25, 2024 and sell it today you would earn a total of 14,721 from holding SPDR SP 500 or generate 34.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.57% |
| Values | Daily Returns |
SSgA SPDR ETFs vs. SPDR SP 500
Performance |
| Timeline |
| SSgA SPDR ETFs |
| SPDR SP 500 |
SSgA SPDR and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSgA SPDR and SPDR SP
The main advantage of trading using opposite SSgA SPDR and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA SPDR 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.| SSgA SPDR vs. Lyxor UCITS Japan | SSgA SPDR vs. Lyxor UCITS Japan | SSgA SPDR vs. Lyxor UCITS Stoxx | SSgA SPDR vs. Amundi CAC 40 |
| SPDR SP vs. Lyxor UCITS Japan | SPDR SP vs. Lyxor UCITS Japan | SPDR SP vs. Lyxor UCITS Stoxx | SPDR SP vs. Amundi CAC 40 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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