Correlation Between SPDR SP and IShares Insurance
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares Insurance 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 SPDR SP and IShares Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Bank and iShares Insurance ETF, you can compare the effects of market volatilities on SPDR SP and IShares Insurance 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 SPDR SP with a short position of IShares Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Insurance.
Diversification Opportunities for SPDR SP and IShares Insurance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Bank and iShares Insurance ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Insurance ETF and SPDR SP 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 SPDR SP Bank are associated (or correlated) with IShares Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Insurance ETF has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Insurance go up and down completely randomly.
Pair Corralation between SPDR SP and IShares Insurance
Considering the 90-day investment horizon SPDR SP Bank is expected to generate 1.88 times more return on investment than IShares Insurance. However, SPDR SP is 1.88 times more volatile than iShares Insurance ETF. It trades about 0.11 of its potential returns per unit of risk. iShares Insurance ETF is currently generating about 0.14 per unit of risk. If you would invest 3,178 in SPDR SP Bank on August 29, 2024 and sell it today you would earn a total of 3,038 from holding SPDR SP Bank or generate 95.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Bank vs. iShares Insurance ETF
Performance |
| Timeline |
| SPDR SP Bank |
| iShares Insurance ETF |
SPDR SP and IShares Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares Insurance
The main advantage of trading using opposite SPDR SP and IShares Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares Insurance 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 IShares Insurance will offset losses from the drop in IShares Insurance's long position.| SPDR SP vs. SPDR SP Regional | SPDR SP vs. SPDR SP Insurance | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders |
| IShares Insurance vs. UBS AG London | IShares Insurance vs. UBS AG London | IShares Insurance vs. ETRACS Quarterly Pay | IShares Insurance vs. ETRACS 2xMonthly Pay |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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