Correlation Between SSgA SPDR and SP 500

Can any of the company-specific risk be diversified away by investing in both SSgA SPDR and SP 500 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 SP 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SSgA SPDR ETFs and SP 500 VIX, you can compare the effects of market volatilities on SSgA SPDR and SP 500 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 SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and SP 500.

Diversification Opportunities for SSgA SPDR and SP 500

-0.57

Correlation Coefficient

SSgA SPDR  SP 500

Excellent diversification

The 3 months correlation between SSgA and VILX is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and SP 500 VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 VIX 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 ETFs are associated (or correlated) with SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 VIX has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and SP 500 go up and down completely randomly.

Pair Corralation between SSgA SPDR and SP 500

Assuming the 90 days trading horizon SSgA SPDR ETFs is expected to generate 0.06 times more return on investment than SP 500. However, SSgA SPDR ETFs is 17.54 times less risky than SP 500. It trades about 0.17 of its potential returns per unit of risk. SP 500 VIX is currently generating about -0.08 per unit of risk. If you would invest  3,769  in SSgA SPDR ETFs on September 4, 2024 and sell it today you would earn a total of  180.00  from holding SSgA SPDR ETFs or generate 4.78% 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 ETFs  vs.  SP 500 VIX

SSgA SPDR ETFs

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SSgA SPDR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SP 500 VIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP 500 VIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with SSgA SPDR and SP 500

The main advantage of trading using opposite SSgA SPDR and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA SPDR position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.

The idea behind SSgA SPDR ETFs and SP 500 VIX 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.