Correlation Between ALT5 Sigma and SSGA Active

Can any of the company-specific risk be diversified away by investing in both ALT5 Sigma and SSGA Active 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 ALT5 Sigma and SSGA Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALT5 Sigma and SSGA Active Trust, you can compare the effects of market volatilities on ALT5 Sigma and SSGA Active 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 ALT5 Sigma with a short position of SSGA Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALT5 Sigma and SSGA Active.

Diversification Opportunities for ALT5 Sigma and SSGA Active

-0.21

Correlation Coefficient

ALT5 Sigma  SSGA Active

Very good diversification

The 3 months correlation between ALT5 and SSGA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ALT5 Sigma and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust and ALT5 Sigma 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 ALT5 Sigma are associated (or correlated) with SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of ALT5 Sigma i.e., ALT5 Sigma and SSGA Active go up and down completely randomly.

Pair Corralation between ALT5 Sigma and SSGA Active

Given the investment horizon of 90 days ALT5 Sigma is expected to generate 25.63 times more return on investment than SSGA Active. However, ALT5 Sigma is 25.63 times more volatile than SSGA Active Trust. It trades about 0.2 of its potential returns per unit of risk. SSGA Active Trust is currently generating about -0.09 per unit of risk. If you would invest  246.00  in ALT5 Sigma on September 22, 2024 and sell it today you would earn a total of  138.00  from holding ALT5 Sigma or generate 56.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ALT5 Sigma  vs.  SSGA Active Trust

ALT5 Sigma

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALT5 Sigma are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ALT5 Sigma unveiled solid returns over the last few months and may actually be approaching a breakup point.

SSGA Active Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSGA Active Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SSGA Active is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ALT5 Sigma and SSGA Active

The main advantage of trading using opposite ALT5 Sigma and SSGA Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALT5 Sigma position performs unexpectedly, SSGA Active 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 Active will offset losses from the drop in SSGA Active's long position.

The idea behind ALT5 Sigma and SSGA Active Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.