Correlation Between IShares Trust and SPDR Bloomberg
Can any of the company-specific risk be diversified away by investing in both IShares Trust and SPDR Bloomberg 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 Trust and SPDR Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and SPDR Bloomberg Barclays, you can compare the effects of market volatilities on IShares Trust and SPDR Bloomberg 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 Trust with a short position of SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and SPDR Bloomberg.
Diversification Opportunities for IShares Trust and SPDR Bloomberg
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and SPDR Bloomberg Barclays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Barclays and IShares Trust 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 Trust are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Barclays has no effect on the direction of IShares Trust i.e., IShares Trust and SPDR Bloomberg go up and down completely randomly.
Pair Corralation between IShares Trust and SPDR Bloomberg
Given the investment horizon of 90 days IShares Trust is expected to generate 1.82 times less return on investment than SPDR Bloomberg. But when comparing it to its historical volatility, iShares Trust is 1.31 times less risky than SPDR Bloomberg. It trades about 0.04 of its potential returns per unit of risk. SPDR Bloomberg Barclays is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,142 in SPDR Bloomberg Barclays on September 1, 2024 and sell it today you would earn a total of 316.00 from holding SPDR Bloomberg Barclays or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. SPDR Bloomberg Barclays
Performance |
| Timeline |
| iShares Trust |
| SPDR Bloomberg Barclays |
IShares Trust and SPDR Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and SPDR Bloomberg
The main advantage of trading using opposite IShares Trust and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, SPDR Bloomberg 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 Bloomberg will offset losses from the drop in SPDR Bloomberg's long position.| IShares Trust vs. SSGA Active Trust | IShares Trust vs. BlackRock Intermediate Muni | IShares Trust vs. iShares BBB Rated | IShares Trust vs. Xtrackers Short Duration |
| SPDR Bloomberg vs. SPDR DoubleLine Emerging | SPDR Bloomberg vs. SPDR SSGA Fixed | SPDR Bloomberg vs. SPDR Series Trust | SPDR Bloomberg vs. SSGA Active Trust |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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