Correlation Between SPDR SP and IShares Environmental
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares Environmental 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 SP and IShares Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Global and iShares Environmental Infrastructure, you can compare the effects of market volatilities on SPDR SP and IShares Environmental 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 SP with a short position of IShares Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Environmental.
Diversification Opportunities for SPDR SP and IShares Environmental
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Global and iShares Environmental Infrastr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Environmental and SPDR SP 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 SP Global are associated (or correlated) with IShares Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Environmental has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Environmental go up and down completely randomly.
Pair Corralation between SPDR SP and IShares Environmental
Considering the 90-day investment horizon SPDR SP Global is expected to generate 0.91 times more return on investment than IShares Environmental. However, SPDR SP Global is 1.1 times less risky than IShares Environmental. It trades about 0.1 of its potential returns per unit of risk. iShares Environmental Infrastructure is currently generating about 0.09 per unit of risk. If you would invest 4,941 in SPDR SP Global on September 3, 2024 and sell it today you would earn a total of 1,293 from holding SPDR SP Global or generate 26.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Global vs. iShares Environmental Infrastr
Performance |
| Timeline |
| SPDR SP Global |
| iShares Environmental |
SPDR SP and IShares Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares Environmental
The main advantage of trading using opposite SPDR SP and IShares Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares Environmental 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 Environmental will offset losses from the drop in IShares Environmental's long position.| SPDR SP vs. iShares Dividend and | SPDR SP vs. Martin Currie Sustainable | SPDR SP vs. VictoryShares THB Mid | SPDR SP vs. Mast Global Battery |
| IShares Environmental vs. Global X Infrastructure | IShares Environmental vs. FlexShares STOXX Global | IShares Environmental vs. Invesco Dynamic Leisure | IShares Environmental vs. SPDR SP Global |
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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