Correlation Between SPDR SP and IShares SPASX
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares SPASX 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 SP and IShares SPASX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and iShares SPASX Small, you can compare the effects of market volatilities on SPDR SP and IShares SPASX 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 SP with a short position of IShares SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares SPASX.
Diversification Opportunities for SPDR SP and IShares SPASX
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and iShares SPASX Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPASX Small and SPDR SP 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 SP 500 are associated (or correlated) with IShares SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPASX Small has no effect on the direction of SPDR SP i.e., SPDR SP and IShares SPASX go up and down completely randomly.
Pair Corralation between SPDR SP and IShares SPASX
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 0.77 times more return on investment than IShares SPASX. However, SPDR SP 500 is 1.3 times less risky than IShares SPASX. It trades about 0.13 of its potential returns per unit of risk. iShares SPASX Small is currently generating about 0.04 per unit of risk. If you would invest 67,964 in SPDR SP 500 on August 26, 2024 and sell it today you would earn a total of 23,245 from holding SPDR SP 500 or generate 34.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. iShares SPASX Small
Performance |
| Timeline |
| SPDR SP 500 |
| iShares SPASX Small |
SPDR SP and IShares SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares SPASX
The main advantage of trading using opposite SPDR SP and IShares SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares SPASX 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 SPASX will offset losses from the drop in IShares SPASX's long position.| SPDR SP vs. BetaShares Global Banks | SPDR SP vs. Beta Shares SPASX | SPDR SP vs. SPDR SPASX 200 | SPDR SP vs. Vanguard Australian Property |
| IShares SPASX vs. iShares Core SP | IShares SPASX vs. iShares CoreSP MidCap | IShares SPASX vs. SPDR SP 500 | IShares SPASX vs. iShares Core SP |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |