Correlation Between SPDR Portfolio and IShares ESG
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and IShares ESG 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 ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and iShares ESG MSCI, you can compare the effects of market volatilities on SPDR Portfolio and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and IShares ESG.
Diversification Opportunities for SPDR Portfolio and IShares ESG
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 Portfolio SP and iShares ESG MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG MSCI 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 SP are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG MSCI has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and IShares ESG go up and down completely randomly.
Pair Corralation between SPDR Portfolio and IShares ESG
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 0.97 times more return on investment than IShares ESG. However, SPDR Portfolio SP is 1.03 times less risky than IShares ESG. It trades about -0.09 of its potential returns per unit of risk. iShares ESG MSCI is currently generating about -0.11 per unit of risk. If you would invest 6,772 in SPDR Portfolio SP on January 9, 2025 and sell it today you would lose (863.00) from holding SPDR Portfolio SP or give up 12.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. iShares ESG MSCI
Performance |
| Timeline |
| SPDR Portfolio SP |
| iShares ESG MSCI |
SPDR Portfolio and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and IShares ESG
The main advantage of trading using opposite SPDR Portfolio and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. Invesco NASDAQ 100 | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP |
| IShares ESG vs. Vanguard Total Stock | IShares ESG vs. SPDR SP 500 | IShares ESG vs. Invesco SP 500 | IShares ESG vs. iShares Russell 1000 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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