Correlation Between SPDR SSgA and Advocate Capital

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

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

Diversification Opportunities for SPDR SSgA and Advocate Capital

-0.21

Correlation Coefficient

SPDR SSgA  Advocate Capital

Very good diversification

The 3 months correlation between SPDR and Advocate is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Income and Advocate Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advocate Capital Man 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 Income are associated (or correlated) with Advocate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advocate Capital Man has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and Advocate Capital go up and down completely randomly.

Pair Corralation between SPDR SSgA and Advocate Capital

If you would invest  2,385  in Advocate Capital Management on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Advocate Capital Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

SPDR SSgA Income  vs.  Advocate Capital Management

SPDR SSgA Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SSgA Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, SPDR SSgA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Advocate Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advocate Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Advocate Capital is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SPDR SSgA and Advocate Capital

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

The idea behind SPDR SSgA Income and Advocate Capital Management 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.