Correlation Between ClearShares Ultra and SPDR SSGA

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

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

Diversification Opportunities for ClearShares Ultra and SPDR SSGA

-0.72

Correlation Coefficient

ClearShares Ultra  SPDR SSGA

Pay attention - limited upside

The 3 months correlation between ClearShares and SPDR is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares Ultra Short Maturi and SPDR SSGA Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Fixed and ClearShares Ultra 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 ClearShares Ultra Short Maturity 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 Fixed has no effect on the direction of ClearShares Ultra i.e., ClearShares Ultra and SPDR SSGA go up and down completely randomly.

Pair Corralation between ClearShares Ultra and SPDR SSGA

Given the investment horizon of 90 days ClearShares Ultra is expected to generate 1.62 times less return on investment than SPDR SSGA. But when comparing it to its historical volatility, ClearShares Ultra Short Maturity is 19.54 times less risky than SPDR SSGA. It trades about 1.02 of its potential returns per unit of risk. SPDR SSGA Fixed is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,556  in SPDR SSGA Fixed on September 18, 2024 and sell it today you would earn a total of  15.00  from holding SPDR SSGA Fixed or generate 0.59% return on investment over 90 days.

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

ClearShares Ultra Short Maturi  vs.  SPDR SSGA Fixed

ClearShares Ultra Short

Risk-Adjusted Performance

83 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Ultra Short Maturity are ranked lower than 83 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ClearShares Ultra is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

SPDR SSGA Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SSGA Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SPDR SSGA 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 ClearShares Ultra and SPDR SSGA

The main advantage of trading using opposite ClearShares Ultra and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearShares Ultra 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 ClearShares Ultra Short Maturity and SPDR SSGA Fixed 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.