Correlation Between IShares 20 and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both IShares 20 and SPDR SSgA 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 20 and SPDR SSgA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 20 Year and SPDR SSgA Global, you can compare the effects of market volatilities on IShares 20 and SPDR SSgA 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 20 with a short position of SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and SPDR SSgA.
Diversification Opportunities for IShares 20 and SPDR SSgA
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and SPDR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and SPDR SSgA Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Global and IShares 20 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 20 Year are associated (or correlated) with SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Global has no effect on the direction of IShares 20 i.e., IShares 20 and SPDR SSgA go up and down completely randomly.
Pair Corralation between IShares 20 and SPDR SSgA
Considering the 90-day investment horizon IShares 20 is expected to generate 1.67 times less return on investment than SPDR SSgA. In addition to that, IShares 20 is 1.72 times more volatile than SPDR SSgA Global. It trades about 0.03 of its total potential returns per unit of risk. SPDR SSgA Global is currently generating about 0.09 per unit of volatility. If you would invest 4,279 in SPDR SSgA Global on August 30, 2024 and sell it today you would earn a total of 263.00 from holding SPDR SSgA Global or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 20 Year vs. SPDR SSgA Global
Performance |
| Timeline |
| iShares 20 Year |
| SPDR SSgA Global |
IShares 20 and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 20 and SPDR SSgA
The main advantage of trading using opposite IShares 20 and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 position performs unexpectedly, SPDR SSgA 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 SSgA will offset losses from the drop in SPDR SSgA's long position.| IShares 20 vs. iShares 7 10 Year | IShares 20 vs. iShares 1 3 Year | IShares 20 vs. iShares Russell 2000 | IShares 20 vs. iShares iBoxx Investment |
| SPDR SSgA vs. SPDR SSgA Income | SPDR SSgA vs. SPDR SSgA Multi Asset | SPDR SSgA vs. SPDR Bloomberg International | SPDR SSgA vs. SPDR Bloomberg Emerging |
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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