Correlation Between IShares Trust and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Trust and SPDR MSCI 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 Trust and SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and SPDR MSCI World, you can compare the effects of market volatilities on IShares Trust and SPDR MSCI 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 Trust with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and SPDR MSCI.
Diversification Opportunities for IShares Trust and SPDR MSCI
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and SPDR MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI World and IShares Trust 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 Trust are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI World has no effect on the direction of IShares Trust i.e., IShares Trust and SPDR MSCI go up and down completely randomly.
Pair Corralation between IShares Trust and SPDR MSCI
Given the investment horizon of 90 days IShares Trust is expected to generate 1.02 times less return on investment than SPDR MSCI. But when comparing it to its historical volatility, iShares Trust is 1.02 times less risky than SPDR MSCI. It trades about 0.11 of its potential returns per unit of risk. SPDR MSCI World is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 11,203 in SPDR MSCI World on August 29, 2024 and sell it today you would earn a total of 1,704 from holding SPDR MSCI World or generate 15.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. SPDR MSCI World
Performance |
| Timeline |
| iShares Trust |
| SPDR MSCI World |
IShares Trust and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and SPDR MSCI
The main advantage of trading using opposite IShares Trust and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, SPDR MSCI 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 MSCI will offset losses from the drop in SPDR MSCI's long position.| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. Akros Monthly Payout | IShares Trust vs. Northern Lights |
| SPDR MSCI vs. SPDR MSCI EAFE | SPDR MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR MSCI USA | SPDR MSCI vs. SPDR SP 1500 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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