Correlation Between Ethereum and SSgA SPDR

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

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

Diversification Opportunities for Ethereum and SSgA SPDR

-0.88

Correlation Coefficient

Ethereum  SSgA SPDR

Pay attention - limited upside

The 3 months correlation between Ethereum and SSgA is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Ethereum 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 Ethereum are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Ethereum i.e., Ethereum and SSgA SPDR go up and down completely randomly.

Pair Corralation between Ethereum and SSgA SPDR

Assuming the 90 days trading horizon Ethereum is expected to under-perform the SSgA SPDR. In addition to that, Ethereum is 53.9 times more volatile than SSgA SPDR ETFs. It trades about -0.2 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.19 per unit of volatility. If you would invest  2,982  in SSgA SPDR ETFs on December 22, 2024 and sell it today you would earn a total of  19.00  from holding SSgA SPDR ETFs or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	68.75%
Values	Daily Returns

Ethereum  vs.  SSgA SPDR ETFs

Ethereum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethereum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Ethereum shareholders.

SSgA SPDR ETFs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 15 (%) 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.

Pair Trading with Ethereum and SSgA SPDR

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

The idea behind Ethereum and SSgA SPDR ETFs 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.