Correlation Between SSgA SPDR and Amundi CAC

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

By analyzing existing cross correlation between SSgA SPDR ETFs and Amundi CAC 40, you can compare the effects of market volatilities on SSgA SPDR and Amundi CAC 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 SSgA SPDR with a short position of Amundi CAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and Amundi CAC.

Diversification Opportunities for SSgA SPDR and Amundi CAC

-0.19

Correlation Coefficient

SSgA SPDR  Amundi CAC

Good diversification

The 3 months correlation between SSgA and Amundi is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and Amundi CAC 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi CAC 40 and SSgA SPDR 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 SSgA SPDR ETFs are associated (or correlated) with Amundi CAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi CAC 40 has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Amundi CAC go up and down completely randomly.

Pair Corralation between SSgA SPDR and Amundi CAC

Assuming the 90 days trading horizon SSgA SPDR is expected to generate 1.62 times less return on investment than Amundi CAC. But when comparing it to its historical volatility, SSgA SPDR ETFs is 1.95 times less risky than Amundi CAC. It trades about 0.2 of its potential returns per unit of risk. Amundi CAC 40 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7,149  in Amundi CAC 40 on September 17, 2024 and sell it today you would earn a total of  142.00  from holding Amundi CAC 40 or generate 1.99% return on investment over 90 days.

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

SSgA SPDR ETFs  vs.  Amundi CAC 40

SSgA SPDR ETFs

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SSgA SPDR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amundi CAC 40

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi CAC 40 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Amundi CAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SSgA SPDR and Amundi CAC

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

The idea behind SSgA SPDR ETFs and Amundi CAC 40 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.