Correlation Between IShares Core and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core MSCI and SPDR SP Materials, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and SPDR SP.
Diversification Opportunities for IShares Core and SPDR SP
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and SPDR SP Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Materials and IShares Core 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 Core MSCI 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 Materials has no effect on the direction of IShares Core i.e., IShares Core and SPDR SP go up and down completely randomly.
Pair Corralation between IShares Core and SPDR SP
Assuming the 90 days trading horizon iShares Core MSCI is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.14 times less risky than SPDR SP. The etf trades about -0.01 of its potential returns per unit of risk. The SPDR SP Materials is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,189 in SPDR SP Materials on September 1, 2024 and sell it today you would earn a total of 170.00 from holding SPDR SP Materials or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. SPDR SP Materials
Performance |
| Timeline |
| iShares Core MSCI |
| SPDR SP Materials |
IShares Core and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and SPDR SP
The main advantage of trading using opposite IShares Core and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares Govt Bond | IShares Core vs. iShares Global AAA AA | IShares Core vs. iShares Smart City | IShares Core vs. iShares Broad High |
| SPDR SP vs. UBS Fund Solutions | SPDR SP vs. Xtrackers Nikkei 225 | SPDR SP vs. iShares VII PLC | SPDR SP vs. Vanguard Funds Public |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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