Correlation Between ISectors and SSGA Active

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

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

Diversification Opportunities for ISectors and SSGA Active

0.0

Correlation Coefficient

ISectors  SSGA Active

Pay attention - limited upside

The 3 months correlation between ISectors and SSGA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ISectors 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 ISectors 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 ISectors 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 ISectors i.e., ISectors and SSGA Active go up and down completely randomly.

Pair Corralation between ISectors and SSGA Active

If you would invest (100.00) in ISectors on September 16, 2024 and sell it today you would earn a total of  100.00  from holding ISectors or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ISectors  vs.  SSGA Active Trust

ISectors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ISectors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ISectors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ISectors and SSGA Active

The main advantage of trading using opposite ISectors and SSGA Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISectors 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 ISectors 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.