Correlation Between BZDYF and SSGA Active

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

By analyzing existing cross correlation between BZDYF and SSGA Active Trust, you can compare the effects of market volatilities on BZDYF and SSGA Active 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 BZDYF with a short position of SSGA Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of BZDYF and SSGA Active.

Diversification Opportunities for BZDYF and SSGA Active

-0.32

Correlation Coefficient

BZDYF  SSGA Active

Very good diversification

The 3 months correlation between BZDYF and SSGA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BZDYF and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust and BZDYF 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 BZDYF are associated (or correlated) with SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of BZDYF i.e., BZDYF and SSGA Active go up and down completely randomly.

Pair Corralation between BZDYF and SSGA Active

Assuming the 90 days horizon BZDYF is expected to under-perform the SSGA Active. In addition to that, BZDYF is 8.7 times more volatile than SSGA Active Trust. It trades about -0.13 of its total potential returns per unit of risk. SSGA Active Trust is currently generating about 0.33 per unit of volatility. If you would invest  2,935  in SSGA Active Trust on February 11, 2024 and sell it today you would earn a total of  29.00  from holding SSGA Active Trust or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.91%
Values	Daily Returns

BZDYF  vs.  SSGA Active Trust

BZDYF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BZDYF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BZDYF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SSGA Active Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SSGA Active Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SSGA Active is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BZDYF and SSGA Active

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

The idea behind BZDYF and SSGA Active Trust 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.