Correlation Between Defiance Quantum and SPDR SSGA

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Can any of the company-specific risk be diversified away by investing in both Defiance Quantum 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 Defiance Quantum and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance Quantum ETF and SPDR SSGA Fixed, you can compare the effects of market volatilities on Defiance Quantum 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 Defiance Quantum with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Quantum and SPDR SSGA.

Diversification Opportunities for Defiance Quantum and SPDR SSGA

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Defiance and SPDR is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Quantum ETF 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 Defiance Quantum 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 Defiance Quantum ETF 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 Defiance Quantum i.e., Defiance Quantum and SPDR SSGA go up and down completely randomly.

Pair Corralation between Defiance Quantum and SPDR SSGA

Given the investment horizon of 90 days Defiance Quantum ETF is expected to generate 3.38 times more return on investment than SPDR SSGA. However, Defiance Quantum is 3.38 times more volatile than SPDR SSGA Fixed. It trades about 0.1 of its potential returns per unit of risk. SPDR SSGA Fixed is currently generating about 0.02 per unit of risk. If you would invest  4,476  in Defiance Quantum ETF on October 5, 2024 and sell it today you would earn a total of  3,765  from holding Defiance Quantum ETF or generate 84.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Defiance Quantum ETF  vs.  SPDR SSGA Fixed

 Performance 
       Timeline  
Defiance Quantum ETF 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Quantum ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Defiance Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.
SPDR SSGA Fixed 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Defiance Quantum and SPDR SSGA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Defiance Quantum and SPDR SSGA

The main advantage of trading using opposite Defiance Quantum and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Quantum 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 Defiance Quantum ETF 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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