Correlation Between SPDR Bloomberg and IShares Broad
Can any of the company-specific risk be diversified away by investing in both SPDR Bloomberg and IShares Broad 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 Bloomberg and IShares Broad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Bloomberg Short and iShares Broad USD, you can compare the effects of market volatilities on SPDR Bloomberg and IShares Broad 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 Bloomberg with a short position of IShares Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and IShares Broad.
Diversification Opportunities for SPDR Bloomberg and IShares Broad
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Short and iShares Broad USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broad USD and SPDR Bloomberg 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 Bloomberg Short are associated (or correlated) with IShares Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broad USD has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and IShares Broad go up and down completely randomly.
Pair Corralation between SPDR Bloomberg and IShares Broad
Given the investment horizon of 90 days SPDR Bloomberg is expected to generate 1.07 times less return on investment than IShares Broad. But when comparing it to its historical volatility, SPDR Bloomberg Short is 1.08 times less risky than IShares Broad. It trades about 0.2 of its potential returns per unit of risk. iShares Broad USD is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,698 in iShares Broad USD on November 18, 2024 and sell it today you would earn a total of 28.00 from holding iShares Broad USD or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Bloomberg Short vs. iShares Broad USD
Performance |
| Timeline |
| SPDR Bloomberg Short |
| iShares Broad USD |
SPDR Bloomberg and IShares Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Bloomberg and IShares Broad
The main advantage of trading using opposite SPDR Bloomberg and IShares Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Bloomberg position performs unexpectedly, IShares Broad 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 Broad will offset losses from the drop in IShares Broad's long position.| SPDR Bloomberg vs. PIMCO 0 5 Year | SPDR Bloomberg vs. iShares 0 5 Year | SPDR Bloomberg vs. Invesco Senior Loan | SPDR Bloomberg vs. SPDR Blackstone Senior |
| IShares Broad vs. Xtrackers USD High | IShares Broad vs. iShares 0 5 Year | IShares Broad vs. iShares Broad USD | IShares Broad vs. Global X Preferred |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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