Correlation Between IShares VII and SPDR FTSE
Can any of the company-specific risk be diversified away by investing in both IShares VII and SPDR FTSE 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 VII and SPDR FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and SPDR FTSE UK, you can compare the effects of market volatilities on IShares VII and SPDR FTSE 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 VII with a short position of SPDR FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and SPDR FTSE.
Diversification Opportunities for IShares VII and SPDR FTSE
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and SPDR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and SPDR FTSE UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FTSE UK and IShares VII 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 VII PLC are associated (or correlated) with SPDR FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FTSE UK has no effect on the direction of IShares VII i.e., IShares VII and SPDR FTSE go up and down completely randomly.
Pair Corralation between IShares VII and SPDR FTSE
Assuming the 90 days trading horizon iShares VII PLC is expected to generate 0.54 times more return on investment than SPDR FTSE. However, iShares VII PLC is 1.84 times less risky than SPDR FTSE. It trades about 0.08 of its potential returns per unit of risk. SPDR FTSE UK is currently generating about 0.02 per unit of risk. If you would invest 2,587,000 in iShares VII PLC on September 12, 2024 and sell it today you would earn a total of 1,365,500 from holding iShares VII PLC or generate 52.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares VII PLC vs. SPDR FTSE UK
Performance |
| Timeline |
| iShares VII PLC |
| SPDR FTSE UK |
IShares VII and SPDR FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and SPDR FTSE
The main advantage of trading using opposite IShares VII and SPDR FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, SPDR FTSE 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 FTSE will offset losses from the drop in SPDR FTSE's long position.| IShares VII vs. Baloise Holding AG | IShares VII vs. 21Shares Polkadot ETP | IShares VII vs. UBS ETF MSCI | IShares VII vs. BB Biotech AG |
| SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR SP Utilities | SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR MSCI EM |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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