Correlation Between SSGA Active and Starboard Investment

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

By analyzing existing cross correlation between SSGA Active Trust and Starboard Investment Trust, you can compare the effects of market volatilities on SSGA Active and Starboard Investment 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 SSGA Active with a short position of Starboard Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSGA Active and Starboard Investment.

Diversification Opportunities for SSGA Active and Starboard Investment

0.46

Correlation Coefficient

SSGA Active  Starboard Investment

Very weak diversification

The 3 months correlation between SSGA and Starboard is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and Starboard Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starboard Investment and SSGA Active 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 SSGA Active Trust are associated (or correlated) with Starboard Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starboard Investment has no effect on the direction of SSGA Active i.e., SSGA Active and Starboard Investment go up and down completely randomly.

Pair Corralation between SSGA Active and Starboard Investment

Given the investment horizon of 90 days SSGA Active Trust is expected to generate 0.47 times more return on investment than Starboard Investment. However, SSGA Active Trust is 2.13 times less risky than Starboard Investment. It trades about -0.07 of its potential returns per unit of risk. Starboard Investment Trust is currently generating about -0.07 per unit of risk. If you would invest  2,598  in SSGA Active Trust on September 22, 2024 and sell it today you would lose (25.00) from holding SSGA Active Trust or give up 0.96% of portfolio value over 90 days.

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

SSGA Active Trust  vs.  Starboard Investment Trust

SSGA Active Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Starboard Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starboard Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Starboard Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SSGA Active and Starboard Investment

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

The idea behind SSGA Active Trust and Starboard Investment 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..