Correlation Between IShares IBonds and SPDR SSGA

Can any of the company-specific risk be diversified away by investing in both IShares IBonds and SPDR SSGA 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 IBonds and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares iBonds Dec and SPDR SSGA My2027, you can compare the effects of market volatilities on IShares IBonds and SPDR SSGA 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 IBonds with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBonds and SPDR SSGA.

Diversification Opportunities for IShares IBonds and SPDR SSGA

0.56

Correlation Coefficient

IShares IBonds  SPDR SSGA

Very weak diversification

The 3 months correlation between IShares and SPDR is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and SPDR SSGA My2027 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA My2027 and IShares IBonds 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 iBonds Dec are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA My2027 has no effect on the direction of IShares IBonds i.e., IShares IBonds and SPDR SSGA go up and down completely randomly.

Pair Corralation between IShares IBonds and SPDR SSGA

Given the investment horizon of 90 days iShares iBonds Dec is expected to generate 0.27 times more return on investment than SPDR SSGA. However, iShares iBonds Dec is 3.72 times less risky than SPDR SSGA. It trades about 0.6 of its potential returns per unit of risk. SPDR SSGA My2027 is currently generating about 0.06 per unit of risk. If you would invest  2,488  in iShares iBonds Dec on October 8, 2024 and sell it today you would earn a total of  18.00  from holding iShares iBonds Dec or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares iBonds Dec  vs.  SPDR SSGA My2027

iShares iBonds Dec

Risk-Adjusted Performance

47 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in iShares iBonds Dec are ranked lower than 47 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, IShares IBonds is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

SPDR SSGA My2027

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA My2027 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares IBonds and SPDR SSGA

The main advantage of trading using opposite IShares IBonds and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBonds position performs unexpectedly, SPDR SSGA 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 SSGA will offset losses from the drop in SPDR SSGA's long position.

The idea behind iShares iBonds Dec and SPDR SSGA My2027 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.