Correlation Between IShares SPTSX and Financial
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and Financial 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 SPTSX and Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX 60 and Financial 15 Split, you can compare the effects of market volatilities on IShares SPTSX and Financial 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 SPTSX with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Financial.
Diversification Opportunities for IShares SPTSX and Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Financial is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX 60 and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and IShares SPTSX 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 SPTSX 60 are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Financial go up and down completely randomly.
Pair Corralation between IShares SPTSX and Financial
Assuming the 90 days trading horizon IShares SPTSX is expected to generate 1.4 times less return on investment than Financial. But when comparing it to its historical volatility, iShares SPTSX 60 is 2.21 times less risky than Financial. It trades about 0.1 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 643.00 in Financial 15 Split on September 12, 2024 and sell it today you would earn a total of 340.00 from holding Financial 15 Split or generate 52.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX 60 vs. Financial 15 Split
Performance |
| Timeline |
| iShares SPTSX 60 |
| Financial 15 Split |
IShares SPTSX and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Financial
The main advantage of trading using opposite IShares SPTSX and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial's long position.| IShares SPTSX vs. iShares Core SP | IShares SPTSX vs. iShares Core SPTSX | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped |
| Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. North American Financial | Financial vs. Life Banc Split |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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