Correlation Between SPDR SSGA and Sustainable Equity

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

By analyzing existing cross correlation between SPDR SSGA Gender and Sustainable Equity Fund, you can compare the effects of market volatilities on SPDR SSGA and Sustainable Equity 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 Sustainable Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSGA and Sustainable Equity.

Diversification Opportunities for SPDR SSGA and Sustainable Equity

0.66

Correlation Coefficient

SPDR SSGA  Sustainable Equity

Poor diversification

The 3 months correlation between SPDR and Sustainable is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSGA Gender and Sustainable Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Equity 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 Gender are associated (or correlated) with Sustainable Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Equity has no effect on the direction of SPDR SSGA i.e., SPDR SSGA and Sustainable Equity go up and down completely randomly.

Pair Corralation between SPDR SSGA and Sustainable Equity

Considering the 90-day investment horizon SPDR SSGA Gender is expected to generate 0.92 times more return on investment than Sustainable Equity. However, SPDR SSGA Gender is 1.09 times less risky than Sustainable Equity. It trades about 0.1 of its potential returns per unit of risk. Sustainable Equity Fund is currently generating about 0.07 per unit of risk. If you would invest  8,001  in SPDR SSGA Gender on October 13, 2024 and sell it today you would earn a total of  3,507  from holding SPDR SSGA Gender or generate 43.83% return on investment over 90 days.

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

SPDR SSGA Gender  vs.  Sustainable Equity Fund

SPDR SSGA Gender

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sustainable Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sustainable Equity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with SPDR SSGA and Sustainable Equity

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

The idea behind SPDR SSGA Gender and Sustainable Equity Fund 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.