Correlation Between SSgA SPDR and Manitou BF

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

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

Diversification Opportunities for SSgA SPDR and Manitou BF

-0.46

Correlation Coefficient

SSgA SPDR  Manitou BF

Very good diversification

The 3 months correlation between SSgA and Manitou is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR SP and Manitou BF SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitou BF SA and SSgA SPDR 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 SSgA SPDR SP are associated (or correlated) with Manitou BF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitou BF SA has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Manitou BF go up and down completely randomly.

Pair Corralation between SSgA SPDR and Manitou BF

Assuming the 90 days trading horizon SSgA SPDR SP is expected to generate 0.52 times more return on investment than Manitou BF. However, SSgA SPDR SP is 1.91 times less risky than Manitou BF. It trades about 0.08 of its potential returns per unit of risk. Manitou BF SA is currently generating about 0.03 per unit of risk. If you would invest  8,878  in SSgA SPDR SP on October 12, 2024 and sell it today you would earn a total of  476.00  from holding SSgA SPDR SP or generate 5.36% return on investment over 90 days.

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

SSgA SPDR SP  vs.  Manitou BF SA

SSgA SPDR SP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR SP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SSgA SPDR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Manitou BF SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Manitou BF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SSgA SPDR and Manitou BF

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

The idea behind SSgA SPDR SP and Manitou BF SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.