Correlation Between SPDR Portfolio and IShares GovernmentCredit
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and IShares GovernmentCredit 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 Portfolio and IShares GovernmentCredit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Aggregate and iShares GovernmentCredit Bond, you can compare the effects of market volatilities on SPDR Portfolio and IShares GovernmentCredit 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 Portfolio with a short position of IShares GovernmentCredit. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and IShares GovernmentCredit.
Diversification Opportunities for SPDR Portfolio and IShares GovernmentCredit
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and iShares GovernmentCredit Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares GovernmentCredit and SPDR Portfolio 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 Portfolio Aggregate are associated (or correlated) with IShares GovernmentCredit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares GovernmentCredit has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and IShares GovernmentCredit go up and down completely randomly.
Pair Corralation between SPDR Portfolio and IShares GovernmentCredit
Given the investment horizon of 90 days SPDR Portfolio Aggregate is expected to generate 0.97 times more return on investment than IShares GovernmentCredit. However, SPDR Portfolio Aggregate is 1.03 times less risky than IShares GovernmentCredit. It trades about 0.06 of its potential returns per unit of risk. iShares GovernmentCredit Bond is currently generating about 0.05 per unit of risk. If you would invest 2,533 in SPDR Portfolio Aggregate on August 29, 2024 and sell it today you would earn a total of 11.00 from holding SPDR Portfolio Aggregate or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Aggregate vs. iShares GovernmentCredit Bond
Performance |
| Timeline |
| SPDR Portfolio Aggregate |
| IShares GovernmentCredit |
SPDR Portfolio and IShares GovernmentCredit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and IShares GovernmentCredit
The main advantage of trading using opposite SPDR Portfolio and IShares GovernmentCredit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, IShares GovernmentCredit 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 GovernmentCredit will offset losses from the drop in IShares GovernmentCredit's long position.| SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Barclays Intermediate | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio Emerging |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| CEOs Directory Screen CEOs from public companies around the world |