Correlation Between SPDR Dow and IShares AEX
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and IShares AEX 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 AEX 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 AEX UCITS, you can compare the effects of market volatilities on SPDR Dow and IShares AEX 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 AEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and IShares AEX.
Diversification Opportunities for SPDR Dow and IShares AEX
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and iShares AEX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AEX UCITS 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 AEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AEX UCITS has no effect on the direction of SPDR Dow i.e., SPDR Dow and IShares AEX go up and down completely randomly.
Pair Corralation between SPDR Dow and IShares AEX
Assuming the 90 days trading horizon SPDR Dow Jones is expected to generate 1.26 times more return on investment than IShares AEX. However, SPDR Dow is 1.26 times more volatile than iShares AEX UCITS. It trades about 0.23 of its potential returns per unit of risk. iShares AEX UCITS is currently generating about -0.07 per unit of risk. If you would invest 38,284 in SPDR Dow Jones on September 13, 2024 and sell it today you would earn a total of 3,991 from holding SPDR Dow Jones or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. iShares AEX UCITS
Performance |
| Timeline |
| SPDR Dow Jones |
| iShares AEX UCITS |
SPDR Dow and IShares AEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and IShares AEX
The main advantage of trading using opposite SPDR Dow and IShares AEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, IShares AEX 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 AEX will offset losses from the drop in IShares AEX'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 AEX vs. Vanguard SP 500 | IShares AEX vs. iShares II Public | IShares AEX vs. Vanguard FTSE All World | IShares AEX 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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