Correlation Between IShares Utilities and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both IShares Utilities and SPDR Dow 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 Dow 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 Dow Jones, you can compare the effects of market volatilities on IShares Utilities and SPDR Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Utilities and SPDR Dow.
Diversification Opportunities for IShares Utilities and SPDR Dow
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and SPDR is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares Utilities ETF and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of IShares Utilities i.e., IShares Utilities and SPDR Dow go up and down completely randomly.
Pair Corralation between IShares Utilities and SPDR Dow
Considering the 90-day investment horizon iShares Utilities ETF is expected to generate 1.02 times more return on investment than SPDR Dow. However, IShares Utilities is 1.02 times more volatile than SPDR Dow Jones. It trades about 0.08 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.01 per unit of risk. If you would invest 7,962 in iShares Utilities ETF on August 31, 2024 and sell it today you would earn a total of 2,595 from holding iShares Utilities ETF or generate 32.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Utilities ETF vs. SPDR Dow Jones
Performance |
| Timeline |
| iShares Utilities ETF |
| SPDR Dow Jones |
IShares Utilities and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Utilities and SPDR Dow
The main advantage of trading using opposite IShares Utilities and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Utilities position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow'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 Dow vs. South Plains Financial | SPDR Dow vs. Red River Bancshares | SPDR Dow vs. NI Holdings | SPDR Dow vs. Western New England |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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