Correlation Between SPDR SPASX and IShares Core
Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and IShares Core 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 SPASX and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SPASX 50 and iShares Core SP, you can compare the effects of market volatilities on SPDR SPASX and IShares Core 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 SPASX with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and IShares Core.
Diversification Opportunities for SPDR SPASX and IShares Core
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 50 and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and SPDR SPASX 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 SPASX 50 are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and IShares Core go up and down completely randomly.
Pair Corralation between SPDR SPASX and IShares Core
Assuming the 90 days trading horizon SPDR SPASX is expected to generate 1.38 times less return on investment than IShares Core. But when comparing it to its historical volatility, SPDR SPASX 50 is 1.52 times less risky than IShares Core. It trades about 0.07 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,252 in iShares Core SP on August 29, 2024 and sell it today you would earn a total of 5,300 from holding iShares Core SP or generate 37.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SPASX 50 vs. iShares Core SP
Performance |
| Timeline |
| SPDR SPASX 50 |
| iShares Core SP |
SPDR SPASX and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SPASX and IShares Core
The main advantage of trading using opposite SPDR SPASX and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| SPDR SPASX vs. SPDR SP 500 | SPDR SPASX vs. Vanguard Total Market | SPDR SPASX vs. iShares Core SP | SPDR SPASX vs. iShares Core SP |
| IShares Core vs. iShares MSCI Emerging | IShares Core vs. iShares Global Aggregate | IShares Core vs. iShares CoreSP MidCap | IShares Core vs. iShares 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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