Correlation Between IShares TIPS and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both IShares TIPS and SPDR Portfolio 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 IShares TIPS and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares TIPS Bond and SPDR Portfolio Aggregate, you can compare the effects of market volatilities on IShares TIPS and SPDR Portfolio 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 IShares TIPS with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares TIPS and SPDR Portfolio.
Diversification Opportunities for IShares TIPS and SPDR Portfolio
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares TIPS Bond and SPDR Portfolio Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Aggregate and IShares TIPS 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 iShares TIPS Bond are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Aggregate has no effect on the direction of IShares TIPS i.e., IShares TIPS and SPDR Portfolio go up and down completely randomly.
Pair Corralation between IShares TIPS and SPDR Portfolio
Considering the 90-day investment horizon iShares TIPS Bond is expected to generate 0.73 times more return on investment than SPDR Portfolio. However, iShares TIPS Bond is 1.37 times less risky than SPDR Portfolio. It trades about -0.07 of its potential returns per unit of risk. SPDR Portfolio Aggregate is currently generating about -0.06 per unit of risk. If you would invest 10,818 in iShares TIPS Bond on August 26, 2024 and sell it today you would lose (41.00) from holding iShares TIPS Bond or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares TIPS Bond vs. SPDR Portfolio Aggregate
Performance |
| Timeline |
| iShares TIPS Bond |
| SPDR Portfolio Aggregate |
IShares TIPS and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares TIPS and SPDR Portfolio
The main advantage of trading using opposite IShares TIPS and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares TIPS position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.| IShares TIPS vs. PIMCO 1 5 Year | IShares TIPS vs. PIMCO 15 Year | IShares TIPS vs. SPDR Bloomberg 1 10 | IShares TIPS vs. FlexShares iBoxx 5 Year |
| SPDR Portfolio vs. iShares MSCI EAFE | SPDR Portfolio vs. iShares iBoxx Investment | SPDR Portfolio vs. iShares TIPS Bond | SPDR Portfolio vs. iShares 1 3 Year |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |