Correlation Between SPDR SP and IShares Expanded
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares Expanded 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 Expanded into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Health and iShares Expanded Tech, you can compare the effects of market volatilities on SPDR SP and IShares Expanded 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 Expanded. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Expanded.
Diversification Opportunities for SPDR SP and IShares Expanded
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and IShares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Health and iShares Expanded Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded Tech 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 Health are associated (or correlated) with IShares Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Expanded go up and down completely randomly.
Pair Corralation between SPDR SP and IShares Expanded
Considering the 90-day investment horizon SPDR SP is expected to generate 33.77 times less return on investment than IShares Expanded. But when comparing it to its historical volatility, SPDR SP Health is 1.02 times less risky than IShares Expanded. It trades about 0.0 of its potential returns per unit of risk. iShares Expanded Tech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,128 in iShares Expanded Tech on November 19, 2024 and sell it today you would earn a total of 5,683 from holding iShares Expanded Tech or generate 110.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Health vs. iShares Expanded Tech
Performance |
| Timeline |
| SPDR SP Health |
| iShares Expanded Tech |
SPDR SP and IShares Expanded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares Expanded
The main advantage of trading using opposite SPDR SP and IShares Expanded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares Expanded 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 Expanded will offset losses from the drop in IShares Expanded's long position.| SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Software | SPDR SP vs. Invesco SP SmallCap | SPDR SP vs. SPDR SP Pharmaceuticals |
| IShares Expanded vs. iShares Global Tech | IShares Expanded vs. iShares Technology ETF | IShares Expanded vs. iShares Consumer Discretionary | IShares Expanded vs. iShares Expanded Tech Software |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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