Correlation Between SPDR SSgA and Investment Managers

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

By analyzing existing cross correlation between SPDR SSgA Multi Asset and Investment Managers Series, you can compare the effects of market volatilities on SPDR SSgA and Investment Managers 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 SPDR SSgA with a short position of Investment Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSgA and Investment Managers.

Diversification Opportunities for SPDR SSgA and Investment Managers

0.94

Correlation Coefficient

SPDR SSgA  Investment Managers

Almost no diversification

The 3 months correlation between SPDR and Investment is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Multi Asset and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers and SPDR SSgA 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 SPDR SSgA Multi Asset are associated (or correlated) with Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and Investment Managers go up and down completely randomly.

Pair Corralation between SPDR SSgA and Investment Managers

Considering the 90-day investment horizon SPDR SSgA is expected to generate 1.43 times less return on investment than Investment Managers. But when comparing it to its historical volatility, SPDR SSgA Multi Asset is 1.22 times less risky than Investment Managers. It trades about 0.11 of its potential returns per unit of risk. Investment Managers Series is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,491  in Investment Managers Series on September 1, 2024 and sell it today you would earn a total of  84.00  from holding Investment Managers Series or generate 5.63% return on investment over 90 days.

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

SPDR SSgA Multi Asset  vs.  Investment Managers Series

SPDR SSgA Multi

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSgA Multi Asset are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, SPDR SSgA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Investment Managers

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investment Managers Series are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Investment Managers is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SPDR SSgA and Investment Managers

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

The idea behind SPDR SSgA Multi Asset and Investment Managers Series 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.