Correlation Between SPDR Portfolio and IShares Core
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and IShares Core 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 Core 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 Core Dividend, you can compare the effects of market volatilities on SPDR Portfolio and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and IShares Core.
Diversification Opportunities for SPDR Portfolio and IShares Core
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and iShares Core Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Dividend 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Dividend has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and IShares Core go up and down completely randomly.
Pair Corralation between SPDR Portfolio and IShares Core
Given the investment horizon of 90 days SPDR Portfolio SP is expected to under-perform the IShares Core. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Portfolio SP is 1.06 times less risky than IShares Core. The etf trades about -0.22 of its potential returns per unit of risk. The iShares Core Dividend is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 6,323 in iShares Core Dividend on September 18, 2024 and sell it today you would lose (69.00) from holding iShares Core Dividend or give up 1.09% 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 Core Dividend
Performance |
| Timeline |
| SPDR Portfolio SP |
| iShares Core Dividend |
SPDR Portfolio and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and IShares Core
The main advantage of trading using opposite SPDR Portfolio and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR SP 600 |
| IShares Core vs. iShares Core High | IShares Core vs. Schwab Dividend Equity | IShares Core vs. ProShares SP 500 | IShares Core vs. Invesco SP 500 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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