Correlation Between SSgA SPDR and WisdomTree NASDAQ

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

By analyzing existing cross correlation between SSgA SPDR ETFs and WisdomTree NASDAQ 100, you can compare the effects of market volatilities on SSgA SPDR and WisdomTree NASDAQ 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 SSgA SPDR with a short position of WisdomTree NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and WisdomTree NASDAQ.

Diversification Opportunities for SSgA SPDR and WisdomTree NASDAQ

0.9

Correlation Coefficient

SSgA SPDR  WisdomTree NASDAQ

Almost no diversification

The 3 months correlation between SSgA and WisdomTree is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and WisdomTree NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree NASDAQ 100 and SSgA SPDR 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 SSgA SPDR ETFs are associated (or correlated) with WisdomTree NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree NASDAQ 100 has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and WisdomTree NASDAQ go up and down completely randomly.

Pair Corralation between SSgA SPDR and WisdomTree NASDAQ

Assuming the 90 days trading horizon SSgA SPDR is expected to generate 12.59 times less return on investment than WisdomTree NASDAQ. But when comparing it to its historical volatility, SSgA SPDR ETFs is 7.0 times less risky than WisdomTree NASDAQ. It trades about 0.16 of its potential returns per unit of risk. WisdomTree NASDAQ 100 is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  15,279  in WisdomTree NASDAQ 100 on April 24, 2025 and sell it today you would earn a total of  10,553  from holding WisdomTree NASDAQ 100 or generate 69.07% return on investment over 90 days.

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

SSgA SPDR ETFs  vs.  WisdomTree NASDAQ 100

SSgA SPDR ETFs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SSgA SPDR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

WisdomTree NASDAQ 100

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree NASDAQ 100 are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree NASDAQ unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SSgA SPDR and WisdomTree NASDAQ

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

The idea behind SSgA SPDR ETFs and WisdomTree NASDAQ 100 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.