Correlation Between SPDR SSGA and Dimensional Core

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

By analyzing existing cross correlation between SPDR SSGA My2026 and Dimensional Core Equity, you can compare the effects of market volatilities on SPDR SSGA and Dimensional Core 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 SSGA with a short position of Dimensional Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSGA and Dimensional Core.

Diversification Opportunities for SPDR SSGA and Dimensional Core

-0.57

Correlation Coefficient

SPDR SSGA  Dimensional Core

Excellent diversification

The 3 months correlation between SPDR and Dimensional is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSGA My2026 and Dimensional Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Core Equity and SPDR SSGA 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 SSGA My2026 are associated (or correlated) with Dimensional Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Core Equity has no effect on the direction of SPDR SSGA i.e., SPDR SSGA and Dimensional Core go up and down completely randomly.

Pair Corralation between SPDR SSGA and Dimensional Core

Given the investment horizon of 90 days SPDR SSGA is expected to generate 4.23 times less return on investment than Dimensional Core. But when comparing it to its historical volatility, SPDR SSGA My2026 is 10.41 times less risky than Dimensional Core. It trades about 0.16 of its potential returns per unit of risk. Dimensional Core Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,851  in Dimensional Core Equity on February 10, 2025 and sell it today you would earn a total of  1,024  from holding Dimensional Core Equity or generate 35.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.92%
Values	Daily Returns

SPDR SSGA My2026  vs.  Dimensional Core Equity

SPDR SSGA My2026

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA My2026 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dimensional Core Equity

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SPDR SSGA and Dimensional Core

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

The idea behind SPDR SSGA My2026 and Dimensional Core Equity 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.