Correlation Between IShares International and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares International and SPDR SP 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 International and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Developed and SPDR SP Emerging, you can compare the effects of market volatilities on IShares International and SPDR SP 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 International with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and SPDR SP.
Diversification Opportunities for IShares International and SPDR SP
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SPDR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging and IShares International 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 International Developed are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Emerging has no effect on the direction of IShares International i.e., IShares International and SPDR SP go up and down completely randomly.
Pair Corralation between IShares International and SPDR SP
Given the investment horizon of 90 days iShares International Developed is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, iShares International Developed is 1.16 times less risky than SPDR SP. The etf trades about -0.18 of its potential returns per unit of risk. The SPDR SP Emerging is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 5,993 in SPDR SP Emerging on October 22, 2024 and sell it today you would lose (276.00) from holding SPDR SP Emerging or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. SPDR SP Emerging
Performance |
| Timeline |
| iShares International |
| SPDR SP Emerging |
IShares International and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and SPDR SP
The main advantage of trading using opposite IShares International and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| IShares International vs. iShares International Treasury | IShares International vs. iShares 1 3 Year | IShares International vs. SPDR Dow Jones | IShares International vs. iShares MSCI Emerging |
| SPDR SP vs. SPDR SP International | SPDR SP vs. WisdomTree Emerging Markets | SPDR SP vs. SPDR SP Emerging | SPDR SP vs. SPDR SP Emerging |
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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