Correlation Between IShares ESG and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both IShares ESG 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 ESG 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 ESG Aware and SPDR Portfolio SP, you can compare the effects of market volatilities on IShares ESG 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 ESG with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and SPDR Portfolio.
Diversification Opportunities for IShares ESG and SPDR Portfolio
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and SPDR is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 Aware 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 SP has no effect on the direction of IShares ESG i.e., IShares ESG and SPDR Portfolio go up and down completely randomly.
Pair Corralation between IShares ESG and SPDR Portfolio
Given the investment horizon of 90 days iShares ESG Aware is expected to under-perform the SPDR Portfolio. In addition to that, IShares ESG is 1.18 times more volatile than SPDR Portfolio SP. It trades about -0.19 of its total potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.09 per unit of volatility. If you would invest 6,861 in SPDR Portfolio SP on August 23, 2024 and sell it today you would earn a total of 122.00 from holding SPDR Portfolio SP or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aware vs. SPDR Portfolio SP
Performance |
| Timeline |
| iShares ESG Aware |
| SPDR Portfolio SP |
IShares ESG and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and SPDR Portfolio
The main advantage of trading using opposite IShares ESG and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG 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 ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG USD |
| SPDR Portfolio vs. iShares ESG Aware | SPDR Portfolio vs. iShares ESG Aware | SPDR Portfolio vs. Vanguard ESG Stock | SPDR Portfolio vs. HUMANA INC |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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