Correlation Between IShares Real and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares Real and SPDR SP 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 SP 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 SP Homebuilders, you can compare the effects of market volatilities on IShares Real and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Real and SPDR SP.
Diversification Opportunities for IShares Real and SPDR SP
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and SPDR is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Real Estate and SPDR SP Homebuilders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Homebuilders 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Homebuilders has no effect on the direction of IShares Real i.e., IShares Real and SPDR SP go up and down completely randomly.
Pair Corralation between IShares Real and SPDR SP
Considering the 90-day investment horizon iShares Real Estate is expected to generate 0.79 times more return on investment than SPDR SP. However, iShares Real Estate is 1.26 times less risky than SPDR SP. It trades about -0.04 of its potential returns per unit of risk. SPDR SP Homebuilders is currently generating about -0.04 per unit of risk. If you would invest 10,249 in iShares Real Estate on August 25, 2024 and sell it today you would lose (213.00) from holding iShares Real Estate or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Real Estate vs. SPDR SP Homebuilders
Performance |
| Timeline |
| iShares Real Estate |
| SPDR SP Homebuilders |
IShares Real and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Real and SPDR SP
The main advantage of trading using opposite IShares Real and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Real position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| IShares Real vs. Vanguard Real Estate | IShares Real vs. Howard Hughes | IShares Real vs. Site Centers Corp |
| SPDR SP vs. iShares Home Construction | SPDR SP vs. SPDR SP Retail | SPDR SP vs. Materials Select Sector | SPDR SP vs. Industrial Select Sector |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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