Correlation Between Inspire International and SPDR SSGA

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

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

Diversification Opportunities for Inspire International and SPDR SSGA

0.78

Correlation Coefficient

Inspire International  SPDR SSGA

Poor diversification

The 3 months correlation between Inspire and SPDR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Inspire International ESG 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 Inspire International 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 Inspire International ESG 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 Inspire International i.e., Inspire International and SPDR SSGA go up and down completely randomly.

Pair Corralation between Inspire International and SPDR SSGA

Given the investment horizon of 90 days Inspire International is expected to generate 1.01 times less return on investment than SPDR SSGA. But when comparing it to its historical volatility, Inspire International ESG is 1.18 times less risky than SPDR SSGA. It trades about 0.06 of its potential returns per unit of risk. SPDR SSGA Sector is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,864  in SPDR SSGA Sector on July 5, 2025 and sell it today you would earn a total of  1,143  from holding SPDR SSGA Sector or generate 23.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.75%
Values	Daily Returns

Inspire International ESG  vs.  SPDR SSGA Sector

Inspire International ESG

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Inspire International ESG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, Inspire International is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 19 (%) 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 November 2025.

Pair Trading with Inspire International and SPDR SSGA

The main advantage of trading using opposite Inspire International and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire International 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 Inspire International ESG 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 Global Correlations module to find global opportunities by holding instruments from different markets.