Correlation Between IShares 1 and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both IShares 1 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 1 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 1 3 Year and SPDR Dow Jones, you can compare the effects of market volatilities on IShares 1 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 1 with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and SPDR Dow.
Diversification Opportunities for IShares 1 and SPDR Dow
Poor diversification
The 3 months correlation between IShares and SPDR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 3 Year 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 1 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 1 3 Year 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 1 i.e., IShares 1 and SPDR Dow go up and down completely randomly.
Pair Corralation between IShares 1 and SPDR Dow
Given the investment horizon of 90 days iShares 1 3 Year is expected to under-perform the SPDR Dow. But the etf apears to be less risky and, when comparing its historical volatility, iShares 1 3 Year is 1.61 times less risky than SPDR Dow. The etf trades about -0.11 of its potential returns per unit of risk. The SPDR Dow Jones is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,591 in SPDR Dow Jones on August 30, 2024 and sell it today you would earn a total of 82.00 from holding SPDR Dow Jones or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 1 3 Year vs. SPDR Dow Jones
Performance |
| Timeline |
| iShares 1 3 |
| SPDR Dow Jones |
IShares 1 and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and SPDR Dow
The main advantage of trading using opposite IShares 1 and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 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 1 vs. Invesco Emerging Markets | IShares 1 vs. SPDR Bloomberg Short | IShares 1 vs. iShares 3 7 Year | IShares 1 vs. iShares MBS ETF |
| SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. iShares International Developed | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR SP Emerging |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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