Correlation Between Nasdaq and SSgA
Can any of the company-specific risk be diversified away by investing in both Nasdaq and 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 Nasdaq and SSgA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and SSgA, you can compare the effects of market volatilities on Nasdaq and 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 Nasdaq with a short position of SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and SSgA.
Diversification Opportunities for Nasdaq and SSgA
Pay attention - limited upside
The 3 months correlation between Nasdaq and SSgA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and SSgA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA and Nasdaq 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 Nasdaq Inc are associated (or correlated) with SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA has no effect on the direction of Nasdaq i.e., Nasdaq and SSgA go up and down completely randomly.
Pair Corralation between Nasdaq and SSgA
If you would invest 5,919 in Nasdaq Inc on December 5, 2024 and sell it today you would earn a total of 2,278 from holding Nasdaq Inc or generate 38.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Nasdaq Inc vs. SSgA
Performance |
Timeline |
Nasdaq Inc |
SSgA |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Nasdaq and SSgA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and SSgA
The main advantage of trading using opposite Nasdaq and SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, 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 SSgA will offset losses from the drop in SSgA's long position.The idea behind Nasdaq Inc and SSgA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |