Correlation Between IShares Canadian and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and SPDR Portfolio 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 Canadian and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Short and SPDR Portfolio Emerging, you can compare the effects of market volatilities on IShares Canadian and SPDR Portfolio 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 Canadian with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and SPDR Portfolio.
Diversification Opportunities for IShares Canadian and SPDR Portfolio
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and SPDR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Short and SPDR Portfolio Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Emerging and IShares Canadian 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 Canadian Short are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Emerging has no effect on the direction of IShares Canadian i.e., IShares Canadian and SPDR Portfolio go up and down completely randomly.
Pair Corralation between IShares Canadian and SPDR Portfolio
Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.41 times less return on investment than SPDR Portfolio. But when comparing it to its historical volatility, iShares Canadian Short is 4.72 times less risky than SPDR Portfolio. It trades about 0.1 of its potential returns per unit of risk. SPDR Portfolio Emerging is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,195 in SPDR Portfolio Emerging on September 2, 2024 and sell it today you would earn a total of 745.00 from holding SPDR Portfolio Emerging or generate 23.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Short vs. SPDR Portfolio Emerging
Performance |
| Timeline |
| iShares Canadian Short |
| SPDR Portfolio Emerging |
IShares Canadian and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and SPDR Portfolio
The main advantage of trading using opposite IShares Canadian and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.| IShares Canadian vs. Vanguard Total Market | IShares Canadian vs. iShares High Quality | IShares Canadian vs. iShares 1 10Yr Laddered | IShares Canadian vs. iShares Canadian HYBrid |
| SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Russell Small |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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