Correlation Between SPDR SP and IShares ESG
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SP 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 SP 500 and iShares ESG Aware, you can compare the effects of market volatilities on SPDR SP 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 SP with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares ESG.
Diversification Opportunities for SPDR SP and IShares ESG
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware 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 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 Aware has no effect on the direction of SPDR SP i.e., SPDR SP and IShares ESG go up and down completely randomly.
Pair Corralation between SPDR SP and IShares ESG
Given the investment horizon of 90 days SPDR SP is expected to generate 14.84 times less return on investment than IShares ESG. But when comparing it to its historical volatility, SPDR SP 500 is 1.02 times less risky than IShares ESG. It trades about 0.02 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,228 in iShares ESG Aware on October 24, 2024 and sell it today you would earn a total of 174.00 from holding iShares ESG Aware or generate 4.12% 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 ESG Aware
Performance |
| Timeline |
| SPDR SP 500 |
| iShares ESG Aware |
SPDR SP and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares ESG
The main advantage of trading using opposite SPDR SP and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SP vs. SPDR SSGA Gender | SPDR SP vs. iShares MSCI ACWI | SPDR SP vs. iShares MSCI KLD | SPDR SP vs. iShares MSCI USA |
| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. iShares ESG USD |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |