Correlation Between IShares Edge and IShares SPASX
Can any of the company-specific risk be diversified away by investing in both IShares Edge and IShares SPASX 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 IShares Edge and IShares SPASX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Edge MSCI and iShares SPASX Small, you can compare the effects of market volatilities on IShares Edge and IShares SPASX 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 IShares Edge with a short position of IShares SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and IShares SPASX.
Diversification Opportunities for IShares Edge and IShares SPASX
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and iShares SPASX Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPASX Small and IShares Edge 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 iShares Edge MSCI are associated (or correlated) with IShares SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPASX Small has no effect on the direction of IShares Edge i.e., IShares Edge and IShares SPASX go up and down completely randomly.
Pair Corralation between IShares Edge and IShares SPASX
Assuming the 90 days trading horizon iShares Edge MSCI is expected to generate 0.94 times more return on investment than IShares SPASX. However, iShares Edge MSCI is 1.06 times less risky than IShares SPASX. It trades about 0.28 of its potential returns per unit of risk. iShares SPASX Small is currently generating about 0.08 per unit of risk. If you would invest 3,420 in iShares Edge MSCI on September 1, 2024 and sell it today you would earn a total of 141.00 from holding iShares Edge MSCI or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge MSCI vs. iShares SPASX Small
Performance |
| Timeline |
| iShares Edge MSCI |
| iShares SPASX Small |
IShares Edge and IShares SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and IShares SPASX
The main advantage of trading using opposite IShares Edge and IShares SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, IShares SPASX 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 IShares SPASX will offset losses from the drop in IShares SPASX's long position.| IShares Edge vs. BetaShares Global Government | IShares Edge vs. BetaShares Geared Australian | IShares Edge vs. BetaShares Australian Government | IShares Edge vs. BetaShares Global Robotics |
| IShares SPASX vs. iShares MSCI Emerging | IShares SPASX vs. iShares Global Aggregate | IShares SPASX vs. iShares CoreSP MidCap | IShares SPASX vs. iShares SP 500 |
Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |