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 Software, 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
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech and SPDR SP Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Software 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 Software 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 11.5 times less return on investment than SPDR SP. But when comparing it to its historical volatility, iShares Expanded Tech is 1.42 times less risky than SPDR SP. It trades about 0.04 of its potential returns per unit of risk. SPDR SP Software is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 17,021 in SPDR SP Software on August 30, 2024 and sell it today you would earn a total of 2,372 from holding SPDR SP Software or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Expanded Tech vs. SPDR SP Software
Performance |
| Timeline |
| iShares Expanded Tech |
| SPDR SP Software |
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 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| CEOs Directory Screen CEOs from public companies around the world | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |