Correlation Between SPDR SP and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares Convertible 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 Convertible 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 Convertible Bond, you can compare the effects of market volatilities on SPDR SP and IShares Convertible 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 Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Convertible.
Diversification Opportunities for SPDR SP and IShares Convertible
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond 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 Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Convertible go up and down completely randomly.
Pair Corralation between SPDR SP and IShares Convertible
Considering the 90-day investment horizon SPDR SP is expected to generate 1.57 times less return on investment than IShares Convertible. In addition to that, SPDR SP is 1.49 times more volatile than iShares Convertible Bond. It trades about 0.16 of its total potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.38 per unit of volatility. If you would invest 8,483 in iShares Convertible Bond on August 29, 2024 and sell it today you would earn a total of 424.00 from holding iShares Convertible Bond or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. iShares Convertible Bond
Performance |
| Timeline |
| SPDR SP 500 |
| iShares Convertible Bond |
SPDR SP and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares Convertible
The main advantage of trading using opposite SPDR SP and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares Convertible 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 Convertible will offset losses from the drop in IShares Convertible's long position.| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
| IShares Convertible vs. VanEck Vectors Moodys | IShares Convertible vs. BondBloxx ETF Trust | IShares Convertible vs. Vanguard ESG Corporate | IShares Convertible vs. Vanguard Intermediate Term Corporate |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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