Correlation Between SPDR SSGA and ProShares High

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

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

Diversification Opportunities for SPDR SSGA and ProShares High

-0.76

Correlation Coefficient

SPDR SSGA  ProShares High

Pay attention - limited upside

The 3 months correlation between SPDR and ProShares is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSGA Fixed and ProShares High YieldInterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares High Yield and SPDR SSGA 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 SSGA Fixed are associated (or correlated) with ProShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares High Yield has no effect on the direction of SPDR SSGA i.e., SPDR SSGA and ProShares High go up and down completely randomly.

Pair Corralation between SPDR SSGA and ProShares High

Given the investment horizon of 90 days SPDR SSGA Fixed is expected to under-perform the ProShares High. In addition to that, SPDR SSGA is 1.61 times more volatile than ProShares High YieldInterest. It trades about -0.15 of its total potential returns per unit of risk. ProShares High YieldInterest is currently generating about 0.25 per unit of volatility. If you would invest  6,368  in ProShares High YieldInterest on September 19, 2024 and sell it today you would earn a total of  201.00  from holding ProShares High YieldInterest or generate 3.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

SPDR SSGA Fixed  vs.  ProShares High YieldInterest

SPDR SSGA Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SSGA Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SPDR SSGA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ProShares High Yield

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares High YieldInterest are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares High is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPDR SSGA and ProShares High

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

The idea behind SPDR SSGA Fixed and ProShares High YieldInterest 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.