Correlation Between SPDR Dow and IShares North
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and IShares North 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 North 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 North American, you can compare the effects of market volatilities on SPDR Dow and IShares North 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 North. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and IShares North.
Diversification Opportunities for SPDR Dow and IShares North
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPDR and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and iShares North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares North American 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 North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares North American has no effect on the direction of SPDR Dow i.e., SPDR Dow and IShares North go up and down completely randomly.
Pair Corralation between SPDR Dow and IShares North
Considering the 90-day investment horizon SPDR Dow Jones is expected to generate 1.03 times more return on investment than IShares North. However, SPDR Dow is 1.03 times more volatile than iShares North American. It trades about 0.06 of its potential returns per unit of risk. iShares North American is currently generating about 0.06 per unit of risk. If you would invest 8,419 in SPDR Dow Jones on August 31, 2024 and sell it today you would earn a total of 2,442 from holding SPDR Dow Jones or generate 29.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. iShares North American
Performance |
| Timeline |
| SPDR Dow Jones |
| iShares North American |
SPDR Dow and IShares North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and IShares North
The main advantage of trading using opposite SPDR Dow and IShares North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, IShares North 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 North will offset losses from the drop in IShares North's long position.| SPDR Dow vs. iShares Cohen Steers | SPDR Dow vs. iShares Real Estate | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. iShares Utilities ETF |
| IShares North vs. Mast Global Battery | IShares North vs. Materials Select Sector | IShares North vs. Vanguard Materials Index | IShares North vs. SPDR SP Metals |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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