Correlation Between SPDR SP and IShares Nikkei
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares Nikkei 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 Nikkei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Technology and iShares Nikkei 225, you can compare the effects of market volatilities on SPDR SP and IShares Nikkei 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 Nikkei. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Nikkei.
Diversification Opportunities for SPDR SP and IShares Nikkei
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Technology and iShares Nikkei 225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nikkei 225 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 Technology are associated (or correlated) with IShares Nikkei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Nikkei 225 has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Nikkei go up and down completely randomly.
Pair Corralation between SPDR SP and IShares Nikkei
Assuming the 90 days trading horizon SPDR SP Technology is expected to generate 1.43 times more return on investment than IShares Nikkei. However, SPDR SP is 1.43 times more volatile than iShares Nikkei 225. It trades about 0.04 of its potential returns per unit of risk. iShares Nikkei 225 is currently generating about 0.0 per unit of risk. If you would invest 11,786 in SPDR SP Technology on October 20, 2024 and sell it today you would earn a total of 86.00 from holding SPDR SP Technology or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Technology vs. iShares Nikkei 225
Performance |
| Timeline |
| SPDR SP Technology |
| iShares Nikkei 225 |
SPDR SP and IShares Nikkei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IShares Nikkei
The main advantage of trading using opposite SPDR SP and IShares Nikkei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares Nikkei 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 Nikkei will offset losses from the drop in IShares Nikkei's long position.| SPDR SP vs. UBS Fund Solutions | SPDR SP vs. Xtrackers II | SPDR SP vs. Xtrackers Nikkei 225 | SPDR SP vs. iShares VII PLC |
| IShares Nikkei vs. iShares Govt Bond | IShares Nikkei vs. iShares Global AAA AA | IShares Nikkei vs. iShares Smart City | IShares Nikkei vs. iShares Broad High |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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