Correlation Between SPDR SP and IShares ETF
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SP 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 SP 500 and iShares ETF Trust, you can compare the effects of market volatilities on SPDR SP 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 SP with a short position of IShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares ETF.
Diversification Opportunities for SPDR SP and IShares ETF
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and IShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 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 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 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 SP i.e., SPDR SP and IShares ETF go up and down completely randomly.
Pair Corralation between SPDR SP and IShares ETF
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 2.69 times more return on investment than IShares ETF. However, SPDR SP is 2.69 times more volatile than iShares ETF Trust. It trades about 0.38 of its potential returns per unit of risk. iShares ETF Trust is currently generating about 0.16 per unit of risk. If you would invest 56,864 in SPDR SP 500 on September 1, 2024 and sell it today you would earn a total of 3,391 from holding SPDR SP 500 or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR SP 500 vs. iShares ETF Trust
Performance |
| Timeline |
| SPDR SP 500 |
| iShares ETF Trust |
SPDR SP and IShares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares ETF
The main advantage of trading using opposite SPDR SP and IShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class |
| IShares ETF vs. Dimensional ETF Trust | IShares ETF vs. JPMorgan Inflation Managed | IShares ETF vs. Goldman Sachs ETF | IShares ETF vs. Dimensional ETF Trust |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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