Correlation Between IShares Expanded and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares Expanded 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 Expanded 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 Expanded Tech and SPDR SP Health, you can compare the effects of market volatilities on IShares Expanded 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 Expanded with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and SPDR SP.
Diversification Opportunities for IShares Expanded and SPDR SP
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and SPDR is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech and SPDR SP Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Health and IShares Expanded 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 Expanded Tech 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 Health has no effect on the direction of IShares Expanded i.e., IShares Expanded and SPDR SP go up and down completely randomly.
Pair Corralation between IShares Expanded and SPDR SP
Considering the 90-day investment horizon IShares Expanded is expected to generate 5.59 times less return on investment than SPDR SP. In addition to that, IShares Expanded is 1.05 times more volatile than SPDR SP Health. It trades about 0.04 of its total potential returns per unit of risk. SPDR SP Health is currently generating about 0.23 per unit of volatility. If you would invest 8,800 in SPDR SP Health on August 30, 2024 and sell it today you would earn a total of 578.00 from holding SPDR SP Health or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Expanded Tech vs. SPDR SP Health
Performance |
| Timeline |
| iShares Expanded Tech |
| SPDR SP Health |
IShares Expanded and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Expanded and SPDR SP
The main advantage of trading using opposite IShares Expanded and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Expanded 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 Expanded vs. iShares Global Tech | IShares Expanded vs. iShares Technology ETF | IShares Expanded vs. iShares Consumer Discretionary | IShares Expanded vs. iShares Expanded Tech Software |
| SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Software | SPDR SP vs. Invesco SP SmallCap | SPDR SP vs. SPDR SP Pharmaceuticals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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