Correlation Between SPDR SSgA and BNY Mellon

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

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

Diversification Opportunities for SPDR SSgA and BNY Mellon

0.94

Correlation Coefficient

SPDR SSgA  BNY Mellon

Almost no diversification

The 3 months correlation between SPDR and BNY is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Ultra and BNY Mellon ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon ETF 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 Ultra are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon ETF has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and BNY Mellon go up and down completely randomly.

Pair Corralation between SPDR SSgA and BNY Mellon

Given the investment horizon of 90 days SPDR SSgA is expected to generate 1.19 times less return on investment than BNY Mellon. In addition to that, SPDR SSgA is 1.97 times more volatile than BNY Mellon ETF. It trades about 0.28 of its total potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.67 per unit of volatility. If you would invest  4,920  in BNY Mellon ETF on September 2, 2024 and sell it today you would earn a total of  57.00  from holding BNY Mellon ETF or generate 1.16% return on investment over 90 days.

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

SPDR SSgA Ultra  vs.  BNY Mellon ETF

SPDR SSgA Ultra

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSgA Ultra are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR SSgA is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

BNY Mellon ETF

Risk-Adjusted Performance

52 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon ETF are ranked lower than 52 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BNY Mellon is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SPDR SSgA and BNY Mellon

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

The idea behind SPDR SSgA Ultra and BNY Mellon ETF 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.