Correlation Between SPDR Dow and IShares Residential
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and IShares Residential 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 Dow and IShares Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and iShares Residential and, you can compare the effects of market volatilities on SPDR Dow and IShares Residential 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 Dow with a short position of IShares Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and IShares Residential.
Diversification Opportunities for SPDR Dow and IShares Residential
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and iShares Residential and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Residential and and SPDR Dow 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 Dow Jones are associated (or correlated) with IShares Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Residential and has no effect on the direction of SPDR Dow i.e., SPDR Dow and IShares Residential go up and down completely randomly.
Pair Corralation between SPDR Dow and IShares Residential
Considering the 90-day investment horizon SPDR Dow is expected to generate 1.63 times less return on investment than IShares Residential. But when comparing it to its historical volatility, SPDR Dow Jones is 1.12 times less risky than IShares Residential. It trades about 0.04 of its potential returns per unit of risk. iShares Residential and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,621 in iShares Residential and on December 5, 2024 and sell it today you would earn a total of 2,151 from holding iShares Residential and or generate 32.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
SPDR Dow Jones vs. iShares Residential and
Performance |
| Timeline |
| SPDR Dow Jones |
| iShares Residential and |
SPDR Dow and IShares Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and IShares Residential
The main advantage of trading using opposite SPDR Dow and IShares Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, IShares Residential 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 Residential will offset losses from the drop in IShares Residential's long position.| SPDR Dow vs. SPDR Dow Jones | ||
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| IShares Residential vs. SPDR Dow Jones | ||
| IShares Residential vs. iShares Mortgage Real |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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