Correlation Between SPDR SSGA and TCW ETF

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

Diversification Opportunities for SPDR SSGA and TCW ETF

0.97

Correlation Coefficient

SPDR SSGA  TCW ETF

Almost no diversification

The 3 months correlation between SPDR and TCW is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSGA Gender and TCW ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCW ETF Trust 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 TCW ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCW ETF Trust has no effect on the direction of SPDR SSGA i.e., SPDR SSGA and TCW ETF go up and down completely randomly.

Pair Corralation between SPDR SSGA and TCW ETF

Considering the 90-day investment horizon SPDR SSGA Gender is expected to under-perform the TCW ETF. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SSGA Gender is 1.3 times less risky than TCW ETF. The etf trades about -0.11 of its potential returns per unit of risk. The TCW ETF Trust is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  7,022  in TCW ETF Trust on September 25, 2024 and sell it today you would lose (36.00) from holding TCW ETF Trust or give up 0.51% of portfolio value over 90 days.

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

SPDR SSGA Gender  vs.  TCW ETF Trust

SPDR SSGA Gender

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA Gender are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

TCW ETF Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TCW ETF Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TCW ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR SSGA and TCW ETF

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

The idea behind SPDR SSGA Gender and TCW ETF Trust 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.