Correlation Between IShares China and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares China and SPDR SP 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 China and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China CNY and SPDR SP 500, you can compare the effects of market volatilities on IShares China and SPDR SP 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 China with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and SPDR SP.
Diversification Opportunities for IShares China and SPDR SP
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and SPDR is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and IShares China 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 China CNY are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of IShares China i.e., IShares China and SPDR SP go up and down completely randomly.
Pair Corralation between IShares China and SPDR SP
Assuming the 90 days trading horizon iShares China CNY is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, iShares China CNY is 2.86 times less risky than SPDR SP. The etf trades about -0.09 of its potential returns per unit of risk. The SPDR SP 500 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,309 in SPDR SP 500 on August 28, 2024 and sell it today you would earn a total of 80.00 from holding SPDR SP 500 or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China CNY vs. SPDR SP 500
Performance |
| Timeline |
| iShares China CNY |
| SPDR SP 500 |
IShares China and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and SPDR SP
The main advantage of trading using opposite IShares China and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| IShares China vs. SPDR Dow Jones | IShares China vs. iShares SP 500 | IShares China vs. iShares China CNY | IShares China vs. iShares Core MSCI |
| SPDR SP vs. Vanguard SP 500 | SPDR SP vs. SPDR Dow Jones | SPDR SP vs. iShares Core MSCI | SPDR SP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |