Correlation Between TCW ETF and SPDR SSGA

Can any of the company-specific risk be diversified away by investing in both TCW 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 TCW 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 TCW ETF Trust and SPDR SSGA Gender, you can compare the effects of market volatilities on TCW 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 TCW ETF with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCW ETF and SPDR SSGA.

Diversification Opportunities for TCW ETF and SPDR SSGA

0.97

Correlation Coefficient

TCW ETF  SPDR SSGA

Almost no diversification

The 3 months correlation between TCW and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding TCW ETF Trust and SPDR SSGA Gender in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Gender and TCW 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 TCW 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 Gender has no effect on the direction of TCW ETF i.e., TCW ETF and SPDR SSGA go up and down completely randomly.

Pair Corralation between TCW ETF and SPDR SSGA

Given the investment horizon of 90 days TCW ETF Trust is expected to generate 1.3 times more return on investment than SPDR SSGA. However, TCW ETF is 1.3 times more volatile than SPDR SSGA Gender. It trades about -0.02 of its potential returns per unit of risk. SPDR SSGA Gender is currently generating about -0.11 per unit of risk. If you would invest  7,022  in TCW ETF Trust on September 25, 2024 and sell it today you would lose (36.00) from holding TCW ETF Trust or give up 0.51% of portfolio value over 90 days.

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

TCW ETF Trust  vs.  SPDR SSGA Gender

TCW ETF Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TCW ETF Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TCW ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR SSGA Gender

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA Gender are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TCW ETF and SPDR SSGA

The main advantage of trading using opposite TCW ETF and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TCW 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 TCW ETF Trust and SPDR SSGA Gender 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.