Correlation Between IShares MSCI and SPDR BB
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and SPDR BB 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 MSCI and SPDR BB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI World and SPDR BB SB, you can compare the effects of market volatilities on IShares MSCI and SPDR BB 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 MSCI with a short position of SPDR BB. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and SPDR BB.
Diversification Opportunities for IShares MSCI and SPDR BB
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and SPDR is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI World and SPDR BB SB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR BB SB and IShares MSCI 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 MSCI World are associated (or correlated) with SPDR BB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR BB SB has no effect on the direction of IShares MSCI i.e., IShares MSCI and SPDR BB go up and down completely randomly.
Pair Corralation between IShares MSCI and SPDR BB
Assuming the 90 days trading horizon iShares MSCI World is expected to generate 2.4 times more return on investment than SPDR BB. However, IShares MSCI is 2.4 times more volatile than SPDR BB SB. It trades about 0.18 of its potential returns per unit of risk. SPDR BB SB is currently generating about 0.08 per unit of risk. If you would invest 7,333 in iShares MSCI World on August 30, 2024 and sell it today you would earn a total of 304.00 from holding iShares MSCI World or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI World vs. SPDR BB SB
Performance |
| Timeline |
| iShares MSCI World |
| SPDR BB SB |
IShares MSCI and SPDR BB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and SPDR BB
The main advantage of trading using opposite IShares MSCI and SPDR BB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, SPDR BB 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 BB will offset losses from the drop in SPDR BB's long position.| IShares MSCI vs. iShares III Public | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares France Govt | IShares MSCI vs. iShares Edge MSCI |
| SPDR BB vs. Vanguard SP 500 | SPDR BB vs. SPDR Dow Jones | SPDR BB vs. iShares Core MSCI | SPDR BB vs. iShares SP 500 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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