Correlation Between SPDR Portfolio and IShares ETF
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and IShares ETF 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 ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio TIPS and iShares ETF Trust, you can compare the effects of market volatilities on SPDR Portfolio and IShares ETF 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 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and IShares ETF.
Diversification Opportunities for SPDR Portfolio and IShares ETF
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio TIPS and iShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ETF Trust 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 TIPS are associated (or correlated) with IShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ETF Trust has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and IShares ETF go up and down completely randomly.
Pair Corralation between SPDR Portfolio and IShares ETF
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 2.42 times less return on investment than IShares ETF. In addition to that, SPDR Portfolio is 1.11 times more volatile than iShares ETF Trust. It trades about 0.03 of its total potential returns per unit of risk. iShares ETF Trust is currently generating about 0.08 per unit of volatility. If you would invest 2,452 in iShares ETF Trust on August 29, 2024 and sell it today you would earn a total of 12.00 from holding iShares ETF Trust or generate 0.49% 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 TIPS vs. iShares ETF Trust
Performance |
| Timeline |
| SPDR Portfolio TIPS |
| iShares ETF Trust |
SPDR Portfolio and IShares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and IShares ETF
The main advantage of trading using opposite SPDR Portfolio and IShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, IShares ETF 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 ETF will offset losses from the drop in IShares ETF's long position.| SPDR Portfolio vs. SPDR Bloomberg 1 10 | SPDR Portfolio vs. iShares 0 5 Year | SPDR Portfolio vs. Schwab TIPS ETF | SPDR Portfolio vs. PIMCO 15 Year |
| IShares ETF vs. PIMCO 1 5 Year | IShares ETF vs. PIMCO 15 Year | IShares ETF vs. SPDR Bloomberg 1 10 | IShares ETF vs. FlexShares iBoxx 3 Year |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |