Correlation Between SPDR SP and IShares Global
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP World and iShares Global Healthcare, you can compare the effects of market volatilities on SPDR SP and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Global.
Diversification Opportunities for SPDR SP and IShares Global
-0.64 | Correlation Coefficient |
Excellent 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 World and iShares Global Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Healthcare 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 World are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Healthcare has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Global go up and down completely randomly.
Pair Corralation between SPDR SP and IShares Global
Assuming the 90 days trading horizon SPDR SP World is expected to generate 0.9 times more return on investment than IShares Global. However, SPDR SP World is 1.11 times less risky than IShares Global. It trades about 0.14 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about 0.04 per unit of risk. If you would invest 3,092 in SPDR SP World on August 29, 2024 and sell it today you would earn a total of 1,705 from holding SPDR SP World or generate 55.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP World vs. iShares Global Healthcare
Performance |
| Timeline |
| SPDR SP World |
| iShares Global Healthcare |
SPDR SP and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares Global
The main advantage of trading using opposite SPDR SP and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| SPDR SP vs. BetaShares Global Government | SPDR SP vs. BetaShares Geared Australian | SPDR SP vs. Global X Semiconductor | SPDR SP vs. iShares UBS Government |
| IShares Global vs. iShares MSCI Emerging | IShares Global vs. iShares Global Aggregate | IShares Global vs. iShares CoreSP MidCap | IShares Global vs. iShares 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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