Correlation Between Main Thematic and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Main Thematic and SPDR SSGA 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 Main Thematic and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Thematic Innovation and SPDR SSGA Sector, you can compare the effects of market volatilities on Main Thematic and SPDR SSGA 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 Main Thematic with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Thematic and SPDR SSGA.
Diversification Opportunities for Main Thematic and SPDR SSGA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Main and SPDR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Main Thematic Innovation and SPDR SSGA Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Sector and Main Thematic 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 Main Thematic Innovation are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Sector has no effect on the direction of Main Thematic i.e., Main Thematic and SPDR SSGA go up and down completely randomly.
Pair Corralation between Main Thematic and SPDR SSGA
Given the investment horizon of 90 days Main Thematic Innovation is expected to generate 2.34 times more return on investment than SPDR SSGA. However, Main Thematic is 2.34 times more volatile than SPDR SSGA Sector. It trades about 0.01 of its potential returns per unit of risk. SPDR SSGA Sector is currently generating about -0.06 per unit of risk. If you would invest 2,103 in Main Thematic Innovation on November 27, 2024 and sell it today you would earn a total of 4.00 from holding Main Thematic Innovation or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Main Thematic Innovation vs. SPDR SSGA Sector
Performance |
| Timeline |
| Main Thematic Innovation |
| SPDR SSGA Sector |
Main Thematic and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Thematic and SPDR SSGA
The main advantage of trading using opposite Main Thematic and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Thematic position performs unexpectedly, SPDR SSGA 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 SSGA will offset losses from the drop in SPDR SSGA's long position.| Main Thematic vs. Main Sector Rotation | Main Thematic vs. Global X Thematic | Main Thematic vs. Franklin Exponential Data | Main Thematic vs. Goldman Sachs Innovate |
| SPDR SSGA vs. SPDR SSGA Fixed | SPDR SSGA vs. BlackRock Equity Factor | SPDR SSGA vs. SPDR FactSet Innovative | SPDR SSGA vs. SPDR SP Telecom |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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