Correlation Between Multi Units and SSgA SPDR

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

By analyzing existing cross correlation between Multi Units Luxembourg and SSgA SPDR ETFs, you can compare the effects of market volatilities on Multi Units and SSgA SPDR 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 Multi Units with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Units and SSgA SPDR.

Diversification Opportunities for Multi Units and SSgA SPDR

0.8

Correlation Coefficient

Multi Units  SSgA SPDR

Very poor diversification

The 3 months correlation between Multi and SSgA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units Luxembourg and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Multi Units 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 Multi Units Luxembourg are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Multi Units i.e., Multi Units and SSgA SPDR go up and down completely randomly.

Pair Corralation between Multi Units and SSgA SPDR

Assuming the 90 days trading horizon Multi Units Luxembourg is expected to under-perform the SSgA SPDR. But the etf apears to be less risky and, when comparing its historical volatility, Multi Units Luxembourg is 1.39 times less risky than SSgA SPDR. The etf trades about -0.01 of its potential returns per unit of risk. The SSgA SPDR ETFs is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,215  in SSgA SPDR ETFs on September 28, 2024 and sell it today you would earn a total of  11.00  from holding SSgA SPDR ETFs or generate 0.21% return on investment over 90 days.

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

Multi Units Luxembourg  vs.  SSgA SPDR ETFs

Multi Units Luxembourg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Units Luxembourg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Multi Units is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SSgA SPDR ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSgA SPDR ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SSgA SPDR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multi Units and SSgA SPDR

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

The idea behind Multi Units Luxembourg and SSgA SPDR ETFs 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.