Correlation Between IShares Real and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both IShares Real 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 Real 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 Real Estate and SPDR Dow Jones, you can compare the effects of market volatilities on IShares Real 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 Real with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Real and SPDR Dow.
Diversification Opportunities for IShares Real and SPDR Dow
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Real Estate 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 Real 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 Real Estate 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 Real i.e., IShares Real and SPDR Dow go up and down completely randomly.
Pair Corralation between IShares Real and SPDR Dow
Considering the 90-day investment horizon IShares Real is expected to generate 1.08 times less return on investment than SPDR Dow. In addition to that, IShares Real is 1.02 times more volatile than SPDR Dow Jones. It trades about 0.07 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.08 per unit of volatility. If you would invest 9,796 in SPDR Dow Jones on November 2, 2024 and sell it today you would earn a total of 181.00 from holding SPDR Dow Jones or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
iShares Real Estate vs. SPDR Dow Jones
Performance |
| Timeline |
| iShares Real Estate |
| SPDR Dow Jones |
IShares Real and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Real and SPDR Dow
The main advantage of trading using opposite IShares Real and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Real 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 Real vs. iShares Cohen Steers | IShares Real vs. iShares Basic Materials | IShares Real vs. SPDR Dow Jones | IShares Real vs. iShares Telecommunications ETF |
| SPDR Dow vs. iShares Cohen Steers | SPDR Dow vs. iShares Real Estate | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. iShares Utilities ETF |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |