Correlation Between ALPS Intermediate and SPDR SSGA

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

By analyzing existing cross correlation between ALPS Intermediate Municipal and SPDR SSGA My2028, you can compare the effects of market volatilities on ALPS Intermediate and SPDR SSGA 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 ALPS Intermediate with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPS Intermediate and SPDR SSGA.

Diversification Opportunities for ALPS Intermediate and SPDR SSGA

0.95

Correlation Coefficient

ALPS Intermediate  SPDR SSGA

Almost no diversification

The 3 months correlation between ALPS and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ALPS Intermediate Municipal and SPDR SSGA My2028 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA My2028 and ALPS Intermediate 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 ALPS Intermediate Municipal are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA My2028 has no effect on the direction of ALPS Intermediate i.e., ALPS Intermediate and SPDR SSGA go up and down completely randomly.

Pair Corralation between ALPS Intermediate and SPDR SSGA

Given the investment horizon of 90 days ALPS Intermediate Municipal is expected to under-perform the SPDR SSGA. In addition to that, ALPS Intermediate is 1.38 times more volatile than SPDR SSGA My2028. It trades about -0.3 of its total potential returns per unit of risk. SPDR SSGA My2028 is currently generating about -0.32 per unit of volatility. If you would invest  2,483  in SPDR SSGA My2028 on October 10, 2024 and sell it today you would lose (25.00) from holding SPDR SSGA My2028 or give up 1.01% of portfolio value over 90 days.

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

ALPS Intermediate Municipal  vs.  SPDR SSGA My2028

ALPS Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALPS Intermediate Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, ALPS Intermediate is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR SSGA My2028

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SSGA My2028 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ALPS Intermediate and SPDR SSGA

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

The idea behind ALPS Intermediate Municipal and SPDR SSGA My2028 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.