Correlation Between IShares European and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both IShares European and SPDR Dow 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 European and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares European Property and SPDR Dow Jones, you can compare the effects of market volatilities on IShares European and SPDR Dow 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 European with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares European and SPDR Dow.
Diversification Opportunities for IShares European and SPDR Dow
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and SPDR is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares European Property and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and IShares European 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 European Property are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of IShares European i.e., IShares European and SPDR Dow go up and down completely randomly.
Pair Corralation between IShares European and SPDR Dow
Assuming the 90 days trading horizon iShares European Property is expected to under-perform the SPDR Dow. In addition to that, IShares European is 2.07 times more volatile than SPDR Dow Jones. It trades about -0.03 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.15 per unit of volatility. If you would invest 41,600 in SPDR Dow Jones on September 12, 2024 and sell it today you would earn a total of 785.00 from holding SPDR Dow Jones or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares European Property vs. SPDR Dow Jones
Performance |
| Timeline |
| iShares European Property |
| SPDR Dow Jones |
IShares European and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares European and SPDR Dow
The main advantage of trading using opposite IShares European and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares European position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow's long position.| IShares European vs. SPDR Dow Jones | IShares European vs. iShares Core MSCI | IShares European vs. iShares SP 500 | IShares European vs. Vanguard FTSE All World |
| SPDR Dow vs. iShares Core MSCI | SPDR Dow vs. iShares SP 500 | SPDR Dow vs. Vanguard FTSE All World | SPDR Dow vs. iShares Core MSCI |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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