Correlation Between IShares Global and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both IShares Global and SPDR Dow 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 Global and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global REIT and SPDR Dow Jones, you can compare the effects of market volatilities on IShares Global and SPDR Dow 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 Global with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and SPDR Dow.
Diversification Opportunities for IShares Global and SPDR Dow
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global REIT and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and IShares Global 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 Global REIT are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of IShares Global i.e., IShares Global and SPDR Dow go up and down completely randomly.
Pair Corralation between IShares Global and SPDR Dow
Given the investment horizon of 90 days iShares Global REIT is expected to generate 1.0 times more return on investment than SPDR Dow. However, iShares Global REIT is 1.0 times less risky than SPDR Dow. It trades about 0.03 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.01 per unit of risk. If you would invest 2,578 in iShares Global REIT on August 28, 2024 and sell it today you would earn a total of 37.00 from holding iShares Global REIT or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global REIT vs. SPDR Dow Jones
Performance |
| Timeline |
| iShares Global REIT |
| SPDR Dow Jones |
IShares Global and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and SPDR Dow
The main advantage of trading using opposite IShares Global and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow's long position.| IShares Global vs. iShares International Treasury | IShares Global vs. iShares 1 3 Year | IShares Global vs. iShares MSCI Emerging |
| SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. iShares International Developed | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR SP Emerging |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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