Correlation Between SPDR Dow and IShares Core
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and IShares Core 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 Dow and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and iShares Core MSCI, you can compare the effects of market volatilities on SPDR Dow and IShares Core 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 Dow with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and IShares Core.
Diversification Opportunities for SPDR Dow and IShares Core
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI and SPDR Dow 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 Dow Jones are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of SPDR Dow i.e., SPDR Dow and IShares Core go up and down completely randomly.
Pair Corralation between SPDR Dow and IShares Core
Assuming the 90 days trading horizon SPDR Dow Jones is expected to generate 0.95 times more return on investment than IShares Core. However, SPDR Dow Jones is 1.06 times less risky than IShares Core. It trades about 0.24 of its potential returns per unit of risk. iShares Core MSCI is currently generating about 0.09 per unit of risk. If you would invest 36,685 in SPDR Dow Jones on August 24, 2024 and sell it today you would earn a total of 5,120 from holding SPDR Dow Jones or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. iShares Core MSCI
Performance |
| Timeline |
| SPDR Dow Jones |
| iShares Core MSCI |
SPDR Dow and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and IShares Core
The main advantage of trading using opposite SPDR Dow and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| SPDR Dow vs. SPDR MSCI World | SPDR Dow vs. SPDR SP Dividend | SPDR Dow vs. SPDR SP 500 | SPDR Dow vs. SPDR BB SB |
| IShares Core vs. iShares III Public | IShares Core vs. iShares France Govt | IShares Core vs. iShares Edge MSCI | IShares Core vs. iShares Core FTSE |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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