Correlation Between IShares Core and SPDR SPASX
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core SP and SPDR SPASX 200, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of SPDR SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and SPDR SPASX.
Diversification Opportunities for IShares Core and SPDR SPASX
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SPDR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP 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 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 SP 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 Core i.e., IShares Core and SPDR SPASX go up and down completely randomly.
Pair Corralation between IShares Core and SPDR SPASX
Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.78 times more return on investment than SPDR SPASX. However, iShares Core SP is 1.28 times less risky than SPDR SPASX. It trades about 0.14 of its potential returns per unit of risk. SPDR SPASX 200 is currently generating about 0.1 per unit of risk. If you would invest 3,807 in iShares Core SP on August 29, 2024 and sell it today you would earn a total of 2,393 from holding iShares Core SP or generate 62.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. SPDR SPASX 200
Performance |
| Timeline |
| iShares Core SP |
| SPDR SPASX 200 |
IShares Core and SPDR SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and SPDR SPASX
The main advantage of trading using opposite IShares Core and SPDR SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares SP 500 |
| SPDR SPASX vs. SPDR SPASX 200 | SPDR SPASX vs. SPDR SPASX 50 | SPDR SPASX vs. SPDR MSCI World | SPDR SPASX vs. SPDR Dow Jones |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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