Correlation Between IShares CoreSP and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares CoreSP 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 CoreSP 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 CoreSP MidCap and SPDR SP 500, you can compare the effects of market volatilities on IShares CoreSP 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 CoreSP with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares CoreSP and SPDR SP.
Diversification Opportunities for IShares CoreSP and SPDR SP
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares CoreSP MidCap and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and IShares CoreSP 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 CoreSP MidCap 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 500 has no effect on the direction of IShares CoreSP i.e., IShares CoreSP and SPDR SP go up and down completely randomly.
Pair Corralation between IShares CoreSP and SPDR SP
Assuming the 90 days trading horizon iShares CoreSP MidCap is expected to generate 1.34 times more return on investment than SPDR SP. However, IShares CoreSP is 1.34 times more volatile than SPDR SP 500. It trades about 0.31 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.18 per unit of risk. If you would invest 4,738 in iShares CoreSP MidCap on August 29, 2024 and sell it today you would earn a total of 472.00 from holding iShares CoreSP MidCap or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares CoreSP MidCap vs. SPDR SP 500
Performance |
| Timeline |
| iShares CoreSP MidCap |
| SPDR SP 500 |
IShares CoreSP and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares CoreSP and SPDR SP
The main advantage of trading using opposite IShares CoreSP and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares CoreSP 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 CoreSP vs. Betashares Asia Technology | IShares CoreSP vs. CD Private Equity | IShares CoreSP vs. BetaShares Australia 200 | IShares CoreSP vs. Australian High Interest |
| SPDR SP vs. SPDR SPASX 200 | SPDR SP vs. SPDR SPASX 50 | SPDR SP vs. SPDR MSCI World | SPDR SP vs. SPDR Dow Jones |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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