Correlation Between IShares Preferred and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares Preferred 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 Preferred 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 Preferred and and SPDR SP Dividend, you can compare the effects of market volatilities on IShares Preferred 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 Preferred with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Preferred and SPDR SP.
Diversification Opportunities for IShares Preferred and SPDR SP
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Preferred and and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend 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 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 Dividend has no effect on the direction of IShares Preferred i.e., IShares Preferred and SPDR SP go up and down completely randomly.
Pair Corralation between IShares Preferred and SPDR SP
Considering the 90-day investment horizon IShares Preferred is expected to generate 1.13 times less return on investment than SPDR SP. But when comparing it to its historical volatility, iShares Preferred and is 1.14 times less risky than SPDR SP. It trades about 0.13 of its potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,210 in SPDR SP Dividend on November 1, 2024 and sell it today you would earn a total of 313.00 from holding SPDR SP Dividend or generate 2.37% 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 SP Dividend
Performance |
| Timeline |
| iShares Preferred |
| SPDR SP Dividend |
IShares Preferred and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Preferred and SPDR SP
The main advantage of trading using opposite IShares Preferred and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Preferred 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 Preferred vs. Invesco Preferred ETF | IShares Preferred vs. iShares iBoxx High | IShares Preferred vs. Invesco Financial Preferred | IShares Preferred vs. SPDR Bloomberg High |
| SPDR SP vs. iShares Select Dividend | SPDR SP vs. Vanguard Dividend Appreciation | SPDR SP vs. Vanguard High Dividend | SPDR SP vs. ProShares SP 500 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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