Correlation Between SSgA SPDR and Amundi Euro

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

Diversification Opportunities for SSgA SPDR and Amundi Euro

-0.43

Correlation Coefficient

SSgA SPDR  Amundi Euro

Very good diversification

The 3 months correlation between SSgA and Amundi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and Amundi Euro Stoxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Euro Stoxx 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 Amundi Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Euro Stoxx has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Amundi Euro go up and down completely randomly.

Pair Corralation between SSgA SPDR and Amundi Euro

Assuming the 90 days trading horizon SSgA SPDR ETFs is expected to generate 0.24 times more return on investment than Amundi Euro. However, SSgA SPDR ETFs is 4.1 times less risky than Amundi Euro. It trades about 0.22 of its potential returns per unit of risk. Amundi Euro Stoxx is currently generating about 0.02 per unit of risk. If you would invest  5,229  in SSgA SPDR ETFs on October 4, 2024 and sell it today you would earn a total of  29.00  from holding SSgA SPDR ETFs or generate 0.55% 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.  Amundi Euro Stoxx

SSgA SPDR ETFs

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, SSgA SPDR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Amundi Euro Stoxx

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SSgA SPDR and Amundi Euro

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

The idea behind SSgA SPDR ETFs and Amundi Euro Stoxx 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.