Correlation Between SPDR SSgA and Harbor ETF

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

By analyzing existing cross correlation between SPDR SSgA Global and Harbor ETF Trust, you can compare the effects of market volatilities on SPDR SSgA and Harbor ETF 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 Harbor ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSgA and Harbor ETF.

Diversification Opportunities for SPDR SSgA and Harbor ETF

0.94

Correlation Coefficient

SPDR SSgA  Harbor ETF

Almost no diversification

The 3 months correlation between SPDR and Harbor is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Global and Harbor ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor ETF Trust 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 Global are associated (or correlated) with Harbor ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor ETF Trust has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and Harbor ETF go up and down completely randomly.

Pair Corralation between SPDR SSgA and Harbor ETF

Considering the 90-day investment horizon SPDR SSgA is expected to generate 1.44 times less return on investment than Harbor ETF. But when comparing it to its historical volatility, SPDR SSgA Global is 1.15 times less risky than Harbor ETF. It trades about 0.13 of its potential returns per unit of risk. Harbor ETF Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,275  in Harbor ETF Trust on September 5, 2024 and sell it today you would earn a total of  126.00  from holding Harbor ETF Trust or generate 5.54% return on investment over 90 days.

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

SPDR SSgA Global  vs.  Harbor ETF Trust

SPDR SSgA Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSgA Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SPDR SSgA is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Harbor ETF Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Harbor ETF is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPDR SSgA and Harbor ETF

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

The idea behind SPDR SSgA Global and Harbor ETF Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.