Correlation Between SPDR Global and IShares Global
Can any of the company-specific risk be diversified away by investing in both SPDR Global and IShares Global 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 SPDR Global and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Global Dow and iShares Global 100, you can compare the effects of market volatilities on SPDR Global and IShares Global 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 SPDR Global with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Global and IShares Global.
Diversification Opportunities for SPDR Global and IShares Global
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and IShares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Global Dow and iShares Global 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global 100 and SPDR Global 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 SPDR Global Dow are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global 100 has no effect on the direction of SPDR Global i.e., SPDR Global and IShares Global go up and down completely randomly.
Pair Corralation between SPDR Global and IShares Global
Considering the 90-day investment horizon SPDR Global is expected to generate 1.06 times less return on investment than IShares Global. But when comparing it to its historical volatility, SPDR Global Dow is 1.28 times less risky than IShares Global. It trades about 0.15 of its potential returns per unit of risk. iShares Global 100 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8,925 in iShares Global 100 on November 3, 2024 and sell it today you would earn a total of 1,297 from holding iShares Global 100 or generate 14.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Global Dow vs. iShares Global 100
Performance |
| Timeline |
| SPDR Global Dow |
| iShares Global 100 |
SPDR Global and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Global and IShares Global
The main advantage of trading using opposite SPDR Global and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Global position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| SPDR Global vs. iShares Global 100 | SPDR Global vs. iShares MSCI Belgium | SPDR Global vs. iShares MSCI Netherlands | SPDR Global vs. iShares Dow Jones |
| IShares Global vs. iShares Europe ETF | IShares Global vs. iShares Global Financials | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Global Comm |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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