Correlation Between Main Thematic and SPDR SSGA

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

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

Diversification Opportunities for Main Thematic and SPDR SSGA

0.89

Correlation Coefficient

Main Thematic  SPDR SSGA

Very poor diversification

The 3 months correlation between Main and SPDR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Main Thematic Innovation and SPDR SSGA Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Sector and Main Thematic 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 Main Thematic Innovation are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Sector has no effect on the direction of Main Thematic i.e., Main Thematic and SPDR SSGA go up and down completely randomly.

Pair Corralation between Main Thematic and SPDR SSGA

Given the investment horizon of 90 days Main Thematic Innovation is expected to generate 1.99 times more return on investment than SPDR SSGA. However, Main Thematic is 1.99 times more volatile than SPDR SSGA Sector. It trades about 0.3 of its potential returns per unit of risk. SPDR SSGA Sector is currently generating about 0.26 per unit of risk. If you would invest  2,029  in Main Thematic Innovation on May 21, 2025 and sell it today you would earn a total of  497.00  from holding Main Thematic Innovation or generate 24.49% return on investment over 90 days.

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

Main Thematic Innovation  vs.  SPDR SSGA Sector

Main Thematic Innovation

Risk-Adjusted Performance

Solid

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

SPDR SSGA Sector

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA Sector are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, SPDR SSGA may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Main Thematic and SPDR SSGA

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

The idea behind Main Thematic Innovation and SPDR SSGA Sector 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.