Correlation Between IShares ESG and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both IShares ESG and SPDR SSGA 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 ESG and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Aggregate and SPDR SSGA Fixed, you can compare the effects of market volatilities on IShares ESG and SPDR SSGA 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 ESG with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and SPDR SSGA.
Diversification Opportunities for IShares ESG and SPDR SSGA
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aggregate and SPDR SSGA Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Fixed and IShares ESG 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 ESG Aggregate are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Fixed has no effect on the direction of IShares ESG i.e., IShares ESG and SPDR SSGA go up and down completely randomly.
Pair Corralation between IShares ESG and SPDR SSGA
Given the investment horizon of 90 days iShares ESG Aggregate is expected to generate 0.95 times more return on investment than SPDR SSGA. However, iShares ESG Aggregate is 1.05 times less risky than SPDR SSGA. It trades about 0.07 of its potential returns per unit of risk. SPDR SSGA Fixed is currently generating about 0.05 per unit of risk. If you would invest 4,713 in iShares ESG Aggregate on August 30, 2024 and sell it today you would earn a total of 26.00 from holding iShares ESG Aggregate or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aggregate vs. SPDR SSGA Fixed
Performance |
| Timeline |
| iShares ESG Aggregate |
| SPDR SSGA Fixed |
IShares ESG and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and SPDR SSGA
The main advantage of trading using opposite IShares ESG and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, SPDR SSGA 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 SSGA will offset losses from the drop in SPDR SSGA's long position.| IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. iShares ESG USD | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
| SPDR SSGA vs. SPDR SSGA Sector | SPDR SSGA vs. SPDR DoubleLine Emerging | SPDR SSGA vs. SPDR DoubleLine Short | SPDR SSGA vs. SPDR SSgA Ultra |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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