Correlation Between SSGA Active and FolioBeyond Rising

Can any of the company-specific risk be diversified away by investing in both SSGA Active and FolioBeyond Rising 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 FolioBeyond Rising 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 FolioBeyond Rising Rates, you can compare the effects of market volatilities on SSGA Active and FolioBeyond Rising 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 FolioBeyond Rising. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSGA Active and FolioBeyond Rising.

Diversification Opportunities for SSGA Active and FolioBeyond Rising

-0.68

Correlation Coefficient

SSGA Active  FolioBeyond Rising

Excellent diversification

The 3 months correlation between SSGA and FolioBeyond is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SSGA Active Trust and FolioBeyond Rising Rates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FolioBeyond Rising Rates 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 FolioBeyond Rising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FolioBeyond Rising Rates has no effect on the direction of SSGA Active i.e., SSGA Active and FolioBeyond Rising go up and down completely randomly.

Pair Corralation between SSGA Active and FolioBeyond Rising

Given the investment horizon of 90 days SSGA Active Trust is expected to generate 0.73 times more return on investment than FolioBeyond Rising. However, SSGA Active Trust is 1.38 times less risky than FolioBeyond Rising. It trades about 0.29 of its potential returns per unit of risk. FolioBeyond Rising Rates is currently generating about -0.04 per unit of risk. If you would invest  2,572  in SSGA Active Trust on September 5, 2024 and sell it today you would earn a total of  38.00  from holding SSGA Active Trust or generate 1.48% return on investment over 90 days.

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

SSGA Active Trust  vs.  FolioBeyond Rising Rates

SSGA Active Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SSGA Active Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SSGA Active is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

FolioBeyond Rising Rates

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FolioBeyond Rising Rates are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FolioBeyond Rising is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SSGA Active and FolioBeyond Rising

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

The idea behind SSGA Active Trust and FolioBeyond Rising Rates 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.