Correlation Between IShares IBonds and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both IShares IBonds and SPDR MSCI 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 IBonds and SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBonds Dec and SPDR MSCI ACWI, you can compare the effects of market volatilities on IShares IBonds and SPDR MSCI 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 IBonds with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBonds and SPDR MSCI.
Diversification Opportunities for IShares IBonds and SPDR MSCI
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 iBonds Dec and SPDR MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI ACWI and IShares IBonds 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 iBonds Dec are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI ACWI has no effect on the direction of IShares IBonds i.e., IShares IBonds and SPDR MSCI go up and down completely randomly.
Pair Corralation between IShares IBonds and SPDR MSCI
Given the investment horizon of 90 days IShares IBonds is expected to generate 4.58 times less return on investment than SPDR MSCI. But when comparing it to its historical volatility, iShares iBonds Dec is 3.08 times less risky than SPDR MSCI. It trades about 0.06 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,627 in SPDR MSCI ACWI on November 19, 2024 and sell it today you would earn a total of 1,158 from holding SPDR MSCI ACWI or generate 44.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBonds Dec vs. SPDR MSCI ACWI
Performance |
| Timeline |
| iShares iBonds Dec |
| SPDR MSCI ACWI |
IShares IBonds and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBonds and SPDR MSCI
The main advantage of trading using opposite IShares IBonds and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBonds position performs unexpectedly, SPDR MSCI 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 MSCI will offset losses from the drop in SPDR MSCI's long position.| IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec |
| SPDR MSCI vs. Amplify BlackSwan ISWN | SPDR MSCI vs. Amplify BlackSwan Growth | SPDR MSCI vs. Amplify Thematic All Stars | SPDR MSCI vs. Amplify ETF 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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