Correlation Between SPDR Bloomberg and IShares Trust
Can any of the company-specific risk be diversified away by investing in both SPDR Bloomberg and IShares Trust 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 Bloomberg and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Bloomberg Barclays and iShares Trust , you can compare the effects of market volatilities on SPDR Bloomberg and IShares Trust 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 Bloomberg with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and IShares Trust.
Diversification Opportunities for SPDR Bloomberg and IShares Trust
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Barclays and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and SPDR Bloomberg 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 Bloomberg Barclays are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and IShares Trust go up and down completely randomly.
Pair Corralation between SPDR Bloomberg and IShares Trust
Given the investment horizon of 90 days SPDR Bloomberg Barclays is expected to generate 1.13 times more return on investment than IShares Trust. However, SPDR Bloomberg is 1.13 times more volatile than iShares Trust . It trades about 0.1 of its potential returns per unit of risk. iShares Trust is currently generating about 0.06 per unit of risk. If you would invest 2,427 in SPDR Bloomberg Barclays on August 30, 2024 and sell it today you would earn a total of 23.00 from holding SPDR Bloomberg Barclays or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPDR Bloomberg Barclays vs. iShares Trust
Performance |
| Timeline |
| SPDR Bloomberg Barclays |
| iShares Trust |
SPDR Bloomberg and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Bloomberg and IShares Trust
The main advantage of trading using opposite SPDR Bloomberg and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Bloomberg position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| SPDR Bloomberg vs. SPDR SSGA Fixed | SPDR Bloomberg vs. SSGA Active Trust | SPDR Bloomberg vs. SPDR DoubleLine Short |
| IShares Trust vs. VanEck Emerging Markets | IShares Trust vs. iShares Intl High | IShares Trust vs. iShares International High |
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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