Correlation Between IShares CoreSP and SPDR SPASX
Can any of the company-specific risk be diversified away by investing in both IShares CoreSP and SPDR SPASX 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 SPASX 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 SPASX 200, you can compare the effects of market volatilities on IShares CoreSP and SPDR SPASX 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 SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares CoreSP and SPDR SPASX.
Diversification Opportunities for IShares CoreSP and SPDR SPASX
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares CoreSP MidCap and SPDR SPASX 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SPASX 200 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 SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SPASX 200 has no effect on the direction of IShares CoreSP i.e., IShares CoreSP and SPDR SPASX go up and down completely randomly.
Pair Corralation between IShares CoreSP and SPDR SPASX
Assuming the 90 days trading horizon iShares CoreSP MidCap is expected to generate 1.34 times more return on investment than SPDR SPASX. However, IShares CoreSP is 1.34 times more volatile than SPDR SPASX 200. It trades about 0.09 of its potential returns per unit of risk. SPDR SPASX 200 is currently generating about 0.07 per unit of risk. If you would invest 4,676 in iShares CoreSP MidCap on October 26, 2024 and sell it today you would earn a total of 546.00 from holding iShares CoreSP MidCap or generate 11.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares CoreSP MidCap vs. SPDR SPASX 200
Performance |
| Timeline |
| iShares CoreSP MidCap |
| SPDR SPASX 200 |
IShares CoreSP and SPDR SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares CoreSP and SPDR SPASX
The main advantage of trading using opposite IShares CoreSP and SPDR SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares CoreSP position performs unexpectedly, SPDR SPASX 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 SPASX will offset losses from the drop in SPDR SPASX's long position.| IShares CoreSP vs. iShares MSCI Emerging | IShares CoreSP vs. iShares Global Aggregate | IShares CoreSP vs. iShares SP 500 | IShares CoreSP vs. iShares Core MSCI |
| SPDR SPASX vs. SPDR SPASX 50 | SPDR SPASX vs. SPDR MSCI World | SPDR SPASX vs. SPDR Dow Jones | SPDR SPASX vs. SPDR SP World |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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