Correlation Between IShares 1 and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both IShares 1 and SPDR Portfolio 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 1 and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 1 3 Year and SPDR Portfolio Intermediate, you can compare the effects of market volatilities on IShares 1 and SPDR Portfolio 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 1 with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and SPDR Portfolio.
Diversification Opportunities for IShares 1 and SPDR Portfolio
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 3 Year and SPDR Portfolio Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Inter and IShares 1 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 1 3 Year are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Inter has no effect on the direction of IShares 1 i.e., IShares 1 and SPDR Portfolio go up and down completely randomly.
Pair Corralation between IShares 1 and SPDR Portfolio
Considering the 90-day investment horizon IShares 1 is expected to generate 2.8 times less return on investment than SPDR Portfolio. But when comparing it to its historical volatility, iShares 1 3 Year is 3.06 times less risky than SPDR Portfolio. It trades about 0.13 of its potential returns per unit of risk. SPDR Portfolio Intermediate is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,820 in SPDR Portfolio Intermediate on September 3, 2024 and sell it today you would earn a total of 20.00 from holding SPDR Portfolio Intermediate or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 1 3 Year vs. SPDR Portfolio Intermediate
Performance |
| Timeline |
| iShares 1 3 |
| SPDR Portfolio Inter |
IShares 1 and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and SPDR Portfolio
The main advantage of trading using opposite IShares 1 and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.| IShares 1 vs. iShares 7 10 Year | IShares 1 vs. iShares iBoxx Investment | IShares 1 vs. iShares TIPS Bond | IShares 1 vs. iShares 3 7 Year |
| SPDR Portfolio vs. iShares 10 20 Year | SPDR Portfolio vs. iShares 7 10 Year | SPDR Portfolio vs. iShares 1 3 Year | SPDR Portfolio vs. iShares MBS ETF |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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