Correlation Between IShares MSCI and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and SPDR Portfolio 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 MSCI and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Emerging and SPDR Portfolio Emerging, you can compare the effects of market volatilities on IShares MSCI and SPDR Portfolio 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 MSCI with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and SPDR Portfolio.
Diversification Opportunities for IShares MSCI and SPDR Portfolio
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and SPDR Portfolio Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Emerging and IShares MSCI 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 MSCI Emerging are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Emerging has no effect on the direction of IShares MSCI i.e., IShares MSCI and SPDR Portfolio go up and down completely randomly.
Pair Corralation between IShares MSCI and SPDR Portfolio
Considering the 90-day investment horizon iShares MSCI Emerging is expected to under-perform the SPDR Portfolio. In addition to that, IShares MSCI is 1.11 times more volatile than SPDR Portfolio Emerging. It trades about -0.21 of its total potential returns per unit of risk. SPDR Portfolio Emerging is currently generating about -0.19 per unit of volatility. If you would invest 4,080 in SPDR Portfolio Emerging on August 27, 2024 and sell it today you would lose (151.00) from holding SPDR Portfolio Emerging or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Emerging vs. SPDR Portfolio Emerging
Performance |
| Timeline |
| iShares MSCI Emerging |
| SPDR Portfolio Emerging |
IShares MSCI and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and SPDR Portfolio
The main advantage of trading using opposite IShares MSCI and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.| IShares MSCI vs. Invesco PureBeta MSCI | IShares MSCI vs. Aquagold International | IShares MSCI vs. Morningstar Unconstrained Allocation | IShares MSCI vs. High Yield Municipal Fund |
| SPDR Portfolio vs. Invesco PureBeta MSCI | SPDR Portfolio vs. Aquagold International | SPDR Portfolio vs. Morningstar Unconstrained Allocation | SPDR Portfolio vs. High Yield Municipal Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |