Correlation Between IShares SPTSX and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX 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 IShares SPTSX and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX Capped and iShares Global Healthcare, you can compare the effects of market volatilities on IShares SPTSX 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 IShares SPTSX with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and IShares Global.
Diversification Opportunities for IShares SPTSX and IShares Global
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped 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 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 Capped 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 IShares SPTSX i.e., IShares SPTSX and IShares Global go up and down completely randomly.
Pair Corralation between IShares SPTSX and IShares Global
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 1.12 times more return on investment than IShares Global. However, IShares SPTSX is 1.12 times more volatile than iShares Global Healthcare. It trades about 0.16 of its potential returns per unit of risk. iShares Global Healthcare is currently generating about 0.01 per unit of risk. If you would invest 2,481 in iShares SPTSX Capped on August 28, 2024 and sell it today you would earn a total of 384.00 from holding iShares SPTSX Capped or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX Capped vs. iShares Global Healthcare
Performance |
| Timeline |
| iShares SPTSX Capped |
| iShares Global Healthcare |
IShares SPTSX and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and IShares Global
The main advantage of trading using opposite IShares SPTSX and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX 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.| IShares SPTSX vs. BMO Equal Weight | IShares SPTSX vs. BMO SPTSX Equal | IShares SPTSX vs. BMO Equal Weight |
| IShares Global vs. BMO Equal Weight | IShares Global vs. BMO SPTSX Equal | IShares Global vs. BMO Equal Weight |
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.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |