Correlation Between IShares Technology and SPDR FactSet
Can any of the company-specific risk be diversified away by investing in both IShares Technology and SPDR FactSet 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 Technology and SPDR FactSet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Technology ETF and SPDR FactSet Innovative, you can compare the effects of market volatilities on IShares Technology and SPDR FactSet 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 Technology with a short position of SPDR FactSet. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Technology and SPDR FactSet.
Diversification Opportunities for IShares Technology and SPDR FactSet
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative and IShares Technology 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 Technology ETF are associated (or correlated) with SPDR FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of IShares Technology i.e., IShares Technology and SPDR FactSet go up and down completely randomly.
Pair Corralation between IShares Technology and SPDR FactSet
Considering the 90-day investment horizon iShares Technology ETF is expected to generate 0.81 times more return on investment than SPDR FactSet. However, iShares Technology ETF is 1.24 times less risky than SPDR FactSet. It trades about 0.11 of its potential returns per unit of risk. SPDR FactSet Innovative is currently generating about 0.08 per unit of risk. If you would invest 7,899 in iShares Technology ETF on August 26, 2024 and sell it today you would earn a total of 8,006 from holding iShares Technology ETF or generate 101.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Technology ETF vs. SPDR FactSet Innovative
Performance |
| Timeline |
| iShares Technology ETF |
| SPDR FactSet Innovative |
IShares Technology and SPDR FactSet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Technology and SPDR FactSet
The main advantage of trading using opposite IShares Technology and SPDR FactSet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Technology position performs unexpectedly, SPDR FactSet 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 FactSet will offset losses from the drop in SPDR FactSet's long position.| IShares Technology vs. Invesco DWA Utilities | IShares Technology vs. Invesco Dynamic Large | IShares Technology vs. Invesco Dynamic Large | IShares Technology vs. HUMANA INC |
| SPDR FactSet vs. SPDR SP Software | SPDR FactSet vs. SPDR Morgan Stanley | SPDR FactSet vs. SPDR SP Health |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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