Correlation Between SPDR FTSE and IShares ESG
Can any of the company-specific risk be diversified away by investing in both SPDR FTSE 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 FTSE 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 FTSE International and iShares ESG USD, you can compare the effects of market volatilities on SPDR FTSE 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 FTSE with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR FTSE and IShares ESG.
Diversification Opportunities for SPDR FTSE and IShares ESG
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 FTSE International and iShares ESG USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG USD and SPDR FTSE 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 FTSE International 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 USD has no effect on the direction of SPDR FTSE i.e., SPDR FTSE and IShares ESG go up and down completely randomly.
Pair Corralation between SPDR FTSE and IShares ESG
Considering the 90-day investment horizon SPDR FTSE International is expected to under-perform the IShares ESG. In addition to that, SPDR FTSE is 1.57 times more volatile than iShares ESG USD. It trades about -0.02 of its total potential returns per unit of risk. iShares ESG USD is currently generating about 0.06 per unit of volatility. If you would invest 2,208 in iShares ESG USD on August 27, 2024 and sell it today you would earn a total of 90.00 from holding iShares ESG USD or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR FTSE International vs. iShares ESG USD
Performance |
| Timeline |
| SPDR FTSE International |
| iShares ESG USD |
SPDR FTSE and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR FTSE and IShares ESG
The main advantage of trading using opposite SPDR FTSE and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FTSE 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 FTSE vs. SPDR Bloomberg International | SPDR FTSE vs. SPDR Bloomberg Short | SPDR FTSE vs. iShares 1 3 Year |
| IShares ESG vs. Senstar Technologies | IShares ESG vs. ImmuCell | IShares ESG vs. Anika Therapeutics | IShares ESG vs. Aquagold International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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