Correlation Between IShares Russell and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both IShares Russell and SPDR SSGA 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 Russell and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 1000 and SPDR SSGA Sector, you can compare the effects of market volatilities on IShares Russell and SPDR SSGA 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 Russell with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and SPDR SSGA.
Diversification Opportunities for IShares Russell and SPDR SSGA
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and SPDR SSGA Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Sector and IShares Russell 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 Russell 1000 are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Sector has no effect on the direction of IShares Russell i.e., IShares Russell and SPDR SSGA go up and down completely randomly.
Pair Corralation between IShares Russell and SPDR SSGA
Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 1.12 times more return on investment than SPDR SSGA. However, IShares Russell is 1.12 times more volatile than SPDR SSGA Sector. It trades about 0.18 of its potential returns per unit of risk. SPDR SSGA Sector is currently generating about 0.21 per unit of risk. If you would invest 31,900 in iShares Russell 1000 on August 30, 2024 and sell it today you would earn a total of 1,161 from holding iShares Russell 1000 or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 1000 vs. SPDR SSGA Sector
Performance |
| Timeline |
| iShares Russell 1000 |
| SPDR SSGA Sector |
IShares Russell and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and SPDR SSGA
The main advantage of trading using opposite IShares Russell and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, SPDR SSGA 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 SSGA will offset losses from the drop in SPDR SSGA's long position.| IShares Russell vs. iShares Russell 3000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell 2000 |
| SPDR SSGA vs. SPDR SSGA Fixed | SPDR SSGA vs. BlackRock Equity Factor | SPDR SSGA vs. SPDR FactSet Innovative | SPDR SSGA vs. SPDR SP Telecom |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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