Correlation Between IShares Utilities and SPDR Bloomberg
Can any of the company-specific risk be diversified away by investing in both IShares Utilities 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 Utilities 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 Utilities ETF and SPDR Bloomberg High, you can compare the effects of market volatilities on IShares Utilities 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 Utilities with a short position of SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Utilities and SPDR Bloomberg.
Diversification Opportunities for IShares Utilities and SPDR Bloomberg
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SPDR is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Utilities ETF and SPDR Bloomberg High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg High and IShares Utilities 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 Utilities ETF 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 High has no effect on the direction of IShares Utilities i.e., IShares Utilities and SPDR Bloomberg go up and down completely randomly.
Pair Corralation between IShares Utilities and SPDR Bloomberg
Considering the 90-day investment horizon iShares Utilities ETF is expected to generate 2.39 times more return on investment than SPDR Bloomberg. However, IShares Utilities is 2.39 times more volatile than SPDR Bloomberg High. It trades about 0.05 of its potential returns per unit of risk. SPDR Bloomberg High is currently generating about 0.09 per unit of risk. If you would invest 8,305 in iShares Utilities ETF on August 30, 2024 and sell it today you would earn a total of 2,247 from holding iShares Utilities ETF or generate 27.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Utilities ETF vs. SPDR Bloomberg High
Performance |
| Timeline |
| iShares Utilities ETF |
| SPDR Bloomberg High |
IShares Utilities and SPDR Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Utilities and SPDR Bloomberg
The main advantage of trading using opposite IShares Utilities and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Utilities 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 Utilities vs. iShares Industrials ETF | IShares Utilities vs. iShares Consumer Discretionary | IShares Utilities vs. iShares Consumer Staples | IShares Utilities vs. iShares Telecommunications ETF |
| SPDR Bloomberg vs. iShares iBoxx High | SPDR Bloomberg vs. iShares iBoxx Investment | SPDR Bloomberg vs. iShares JP Morgan | SPDR Bloomberg vs. iShares TIPS Bond |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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