Correlation Between DBX ETF and SPDR SSgA

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

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

Diversification Opportunities for DBX ETF and SPDR SSgA

0.74

Correlation Coefficient

DBX ETF  SPDR SSgA

Poor diversification

The 3 months correlation between DBX and SPDR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and SPDR SSgA Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Income and DBX ETF 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 DBX ETF Trust 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 Income has no effect on the direction of DBX ETF i.e., DBX ETF and SPDR SSgA go up and down completely randomly.

Pair Corralation between DBX ETF and SPDR SSgA

Given the investment horizon of 90 days DBX ETF Trust is expected to generate 1.84 times more return on investment than SPDR SSgA. However, DBX ETF is 1.84 times more volatile than SPDR SSgA Income. It trades about -0.03 of its potential returns per unit of risk. SPDR SSgA Income is currently generating about -0.06 per unit of risk. If you would invest  2,772  in DBX ETF Trust on September 14, 2024 and sell it today you would lose (30.00) from holding DBX ETF Trust or give up 1.08% of portfolio value over 90 days.

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

DBX ETF Trust  vs.  SPDR SSgA Income

DBX ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

SPDR SSgA Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SSgA Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, SPDR SSgA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DBX ETF and SPDR SSgA

The main advantage of trading using opposite DBX ETF and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX ETF 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 DBX ETF Trust and SPDR SSgA Income 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.