Correlation Between IShares Preferred and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both IShares Preferred and SPDR ICE 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 Preferred and SPDR ICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Preferred and and SPDR ICE Preferred, you can compare the effects of market volatilities on IShares Preferred and SPDR ICE 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 Preferred with a short position of SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Preferred and SPDR ICE.
Diversification Opportunities for IShares Preferred and SPDR ICE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SPDR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Preferred and and SPDR ICE Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE Preferred and IShares Preferred 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 Preferred and are associated (or correlated) with SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE Preferred has no effect on the direction of IShares Preferred i.e., IShares Preferred and SPDR ICE go up and down completely randomly.
Pair Corralation between IShares Preferred and SPDR ICE
Considering the 90-day investment horizon iShares Preferred and is expected to generate 0.9 times more return on investment than SPDR ICE. However, iShares Preferred and is 1.12 times less risky than SPDR ICE. It trades about 0.04 of its potential returns per unit of risk. SPDR ICE Preferred is currently generating about 0.03 per unit of risk. If you would invest 2,939 in iShares Preferred and on September 1, 2024 and sell it today you would earn a total of 356.00 from holding iShares Preferred and or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Preferred and vs. SPDR ICE Preferred
Performance |
| Timeline |
| iShares Preferred |
| SPDR ICE Preferred |
IShares Preferred and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Preferred and SPDR ICE
The main advantage of trading using opposite IShares Preferred and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Preferred position performs unexpectedly, SPDR ICE 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 ICE will offset losses from the drop in SPDR ICE's long position.| IShares Preferred vs. Invesco Preferred ETF | IShares Preferred vs. iShares iBoxx High | IShares Preferred vs. Invesco Financial Preferred | IShares Preferred vs. SPDR Bloomberg High |
| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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