Correlation Between Advisors Inner and SPDR SSgA

Can any of the company-specific risk be diversified away by investing in both Advisors Inner 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 Advisors Inner and SPDR SSgA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advisors Inner Circle and SPDR SSgA Multi Asset, you can compare the effects of market volatilities on Advisors Inner 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 Advisors Inner with a short position of SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advisors Inner and SPDR SSgA.

Diversification Opportunities for Advisors Inner and SPDR SSgA

0.71

Correlation Coefficient

Advisors Inner  SPDR SSgA

Poor diversification

The 3 months correlation between Advisors and SPDR is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Advisors Inner Circle and SPDR SSgA Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Multi and Advisors Inner 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 Advisors Inner Circle 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 Multi has no effect on the direction of Advisors Inner i.e., Advisors Inner and SPDR SSgA go up and down completely randomly.

Pair Corralation between Advisors Inner and SPDR SSgA

Considering the 90-day investment horizon Advisors Inner Circle is expected to generate 0.85 times more return on investment than SPDR SSgA. However, Advisors Inner Circle is 1.18 times less risky than SPDR SSgA. It trades about 0.08 of its potential returns per unit of risk. SPDR SSgA Multi Asset is currently generating about 0.04 per unit of risk. If you would invest  2,471  in Advisors Inner Circle on September 12, 2024 and sell it today you would earn a total of  436.00  from holding Advisors Inner Circle or generate 17.64% return on investment over 90 days.

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

Advisors Inner Circle  vs.  SPDR SSgA Multi Asset

Advisors Inner Circle

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advisors Inner Circle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Advisors Inner is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

SPDR SSgA Multi

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSgA Multi Asset are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, SPDR SSgA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advisors Inner and SPDR SSgA

The main advantage of trading using opposite Advisors Inner and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advisors Inner 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.

The idea behind Advisors Inner Circle and SPDR SSgA Multi Asset 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.