Correlation Between SPDR Galaxy and Siren Nasdaq

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

By analyzing existing cross correlation between SPDR Galaxy Digital and Siren Nasdaq NexGen, you can compare the effects of market volatilities on SPDR Galaxy and Siren Nasdaq 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 SPDR Galaxy with a short position of Siren Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Galaxy and Siren Nasdaq.

Diversification Opportunities for SPDR Galaxy and Siren Nasdaq

0.96

Correlation Coefficient

SPDR Galaxy  Siren Nasdaq

Almost no diversification

The 3 months correlation between SPDR and Siren is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Galaxy Digital and Siren Nasdaq NexGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siren Nasdaq NexGen and SPDR Galaxy 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 SPDR Galaxy Digital are associated (or correlated) with Siren Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siren Nasdaq NexGen has no effect on the direction of SPDR Galaxy i.e., SPDR Galaxy and Siren Nasdaq go up and down completely randomly.

Pair Corralation between SPDR Galaxy and Siren Nasdaq

Given the investment horizon of 90 days SPDR Galaxy Digital is expected to generate 1.63 times more return on investment than Siren Nasdaq. However, SPDR Galaxy is 1.63 times more volatile than Siren Nasdaq NexGen. It trades about -0.1 of its potential returns per unit of risk. Siren Nasdaq NexGen is currently generating about -0.18 per unit of risk. If you would invest  3,552  in SPDR Galaxy Digital on December 24, 2024 and sell it today you would lose (850.00) from holding SPDR Galaxy Digital or give up 23.93% of portfolio value over 90 days.

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

SPDR Galaxy Digital  vs.  Siren Nasdaq NexGen

SPDR Galaxy Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Galaxy Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Siren Nasdaq NexGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siren Nasdaq NexGen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with SPDR Galaxy and Siren Nasdaq

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

The idea behind SPDR Galaxy Digital and Siren Nasdaq NexGen 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.