Correlation Between SPDR SP and IShares Select
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares Select 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 SP and IShares Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Dividend and iShares Select Dividend, you can compare the effects of market volatilities on SPDR SP and IShares Select 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 SP with a short position of IShares Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Select.
Diversification Opportunities for SPDR SP and IShares Select
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Dividend and iShares Select Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Select Dividend and SPDR SP 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 SP Dividend are associated (or correlated) with IShares Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Select Dividend has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Select go up and down completely randomly.
Pair Corralation between SPDR SP and IShares Select
Considering the 90-day investment horizon SPDR SP is expected to generate 2.27 times less return on investment than IShares Select. But when comparing it to its historical volatility, SPDR SP Dividend is 1.1 times less risky than IShares Select. It trades about 0.13 of its potential returns per unit of risk. iShares Select Dividend is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 12,955 in iShares Select Dividend on October 20, 2024 and sell it today you would earn a total of 525.00 from holding iShares Select Dividend or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Dividend vs. iShares Select Dividend
Performance |
| Timeline |
| SPDR SP Dividend |
| iShares Select Dividend |
SPDR SP and IShares Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares Select
The main advantage of trading using opposite SPDR SP and IShares Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares Select 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 Select will offset losses from the drop in IShares Select's long position.| SPDR SP vs. iShares Select Dividend | SPDR SP vs. Vanguard Dividend Appreciation | SPDR SP vs. Vanguard High Dividend | SPDR SP vs. ProShares SP 500 |
| IShares Select vs. SPDR SP Dividend | IShares Select vs. Vanguard Dividend Appreciation | IShares Select vs. iShares Core High | IShares Select vs. iShares Preferred and |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |