Correlation Between Xtrackers California and SPDR SSGA

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

By analyzing existing cross correlation between Xtrackers California Municipal and SPDR SSGA My2026, you can compare the effects of market volatilities on Xtrackers California 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 Xtrackers California with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and SPDR SSGA.

Diversification Opportunities for Xtrackers California and SPDR SSGA

0.81

Correlation Coefficient

Xtrackers California  SPDR SSGA

Very poor diversification

The 3 months correlation between Xtrackers and SPDR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and SPDR SSGA My2026 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA My2026 and Xtrackers California 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 Xtrackers California Municipal 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 My2026 has no effect on the direction of Xtrackers California i.e., Xtrackers California and SPDR SSGA go up and down completely randomly.

Pair Corralation between Xtrackers California and SPDR SSGA

Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 3.05 times more return on investment than SPDR SSGA. However, Xtrackers California is 3.05 times more volatile than SPDR SSGA My2026. It trades about 0.04 of its potential returns per unit of risk. SPDR SSGA My2026 is currently generating about 0.1 per unit of risk. If you would invest  2,471  in Xtrackers California Municipal on October 24, 2024 and sell it today you would earn a total of  17.00  from holding Xtrackers California Municipal or generate 0.69% return on investment over 90 days.

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

Xtrackers California Municipal  vs.  SPDR SSGA My2026

Xtrackers California

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers California Municipal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPDR SSGA My2026

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA My2026 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers California and SPDR SSGA

The main advantage of trading using opposite Xtrackers California and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California 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 Xtrackers California Municipal and SPDR SSGA My2026 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.