Correlation Between Akros Monthly and SPDR SSgA

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

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

Diversification Opportunities for Akros Monthly and SPDR SSgA

0.23

Correlation Coefficient

Akros Monthly  SPDR SSgA

Modest diversification

The 3 months correlation between Akros and SPDR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Akros Monthly Payout and SPDR SSgA Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Income and Akros Monthly 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 Akros Monthly Payout 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 Income has no effect on the direction of Akros Monthly i.e., Akros Monthly and SPDR SSgA go up and down completely randomly.

Pair Corralation between Akros Monthly and SPDR SSgA

Given the investment horizon of 90 days Akros Monthly Payout is expected to under-perform the SPDR SSgA. In addition to that, Akros Monthly is 9.56 times more volatile than SPDR SSgA Income. It trades about -0.03 of its total potential returns per unit of risk. SPDR SSgA Income is currently generating about 0.05 per unit of volatility. If you would invest  2,853  in SPDR SSgA Income on October 25, 2024 and sell it today you would earn a total of  322.00  from holding SPDR SSgA Income or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Akros Monthly Payout  vs.  SPDR SSgA Income

Akros Monthly Payout

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Akros Monthly Payout has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

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.

Pair Trading with Akros Monthly and SPDR SSgA

The main advantage of trading using opposite Akros Monthly and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akros Monthly 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 Akros Monthly Payout and SPDR SSgA Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.