Correlation Between IShares China and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both IShares China and SSgA SPDR 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 SSgA SPDR 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 SSgA SPDR ETFs, you can compare the effects of market volatilities on IShares China and SSgA SPDR 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 SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and SSgA SPDR.
Diversification Opportunities for IShares China and SSgA SPDR
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and SSgA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of IShares China i.e., IShares China and SSgA SPDR go up and down completely randomly.
Pair Corralation between IShares China and SSgA SPDR
Assuming the 90 days trading horizon IShares China is expected to generate 7.67 times less return on investment than SSgA SPDR. But when comparing it to its historical volatility, iShares China CNY is 3.94 times less risky than SSgA SPDR. It trades about 0.04 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,801 in SSgA SPDR ETFs on December 4, 2024 and sell it today you would earn a total of 3,983 from holding SSgA SPDR ETFs or generate 58.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares China CNY vs. SSgA SPDR ETFs
Performance |
| Timeline |
| iShares China CNY |
| SSgA SPDR ETFs |
IShares China and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and SSgA SPDR
The main advantage of trading using opposite IShares China and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| IShares China vs. iShares China CNY | IShares China vs. iShares Core FTSE | IShares China vs. iShares MSCI EM | IShares China vs. iShares MSCI China |
| SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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