Correlation Between SPDR MarketAxess and SSGA Active

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

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

Diversification Opportunities for SPDR MarketAxess and SSGA Active

0.81

Correlation Coefficient

SPDR MarketAxess  SSGA Active

Very poor diversification

The 3 months correlation between SPDR and SSGA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MarketAxess Investment 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 SPDR MarketAxess 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 MarketAxess Investment 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 SPDR MarketAxess i.e., SPDR MarketAxess and SSGA Active go up and down completely randomly.

Pair Corralation between SPDR MarketAxess and SSGA Active

Given the investment horizon of 90 days SPDR MarketAxess Investment is expected to generate 2.95 times more return on investment than SSGA Active. However, SPDR MarketAxess is 2.95 times more volatile than SSGA Active Trust. It trades about 0.01 of its potential returns per unit of risk. SSGA Active Trust is currently generating about -0.01 per unit of risk. If you would invest  9,408  in SPDR MarketAxess Investment on February 23, 2024 and sell it today you would earn a total of  30.00  from holding SPDR MarketAxess Investment or generate 0.32% return on investment over 90 days.

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

SPDR MarketAxess Investment  vs.  SSGA Active Trust

SPDR MarketAxess Inv

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MarketAxess Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, SPDR MarketAxess is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SSGA Active Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SPDR MarketAxess and SSGA Active

The main advantage of trading using opposite SPDR MarketAxess and SSGA Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MarketAxess 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 SPDR MarketAxess Investment 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.