Correlation Between IShares Expanded and SPDR FactSet

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

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

Diversification Opportunities for IShares Expanded and SPDR FactSet

0.94

Correlation Coefficient

IShares Expanded  SPDR FactSet

Almost no diversification

The 3 months correlation between IShares and SPDR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative and IShares Expanded 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 Expanded Tech are associated (or correlated) with SPDR FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of IShares Expanded i.e., IShares Expanded and SPDR FactSet go up and down completely randomly.

Pair Corralation between IShares Expanded and SPDR FactSet

Considering the 90-day investment horizon iShares Expanded Tech is expected to generate 0.81 times more return on investment than SPDR FactSet. However, iShares Expanded Tech is 1.24 times less risky than SPDR FactSet. It trades about 0.15 of its potential returns per unit of risk. SPDR FactSet Innovative is currently generating about -0.03 per unit of risk. If you would invest  10,148  in iShares Expanded Tech on September 27, 2024 and sell it today you would earn a total of  423.00  from holding iShares Expanded Tech or generate 4.17% return on investment over 90 days.

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

iShares Expanded Tech  vs.  SPDR FactSet Innovative

iShares Expanded Tech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Expanded Tech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IShares Expanded may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPDR FactSet Innovative

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR FactSet Innovative are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SPDR FactSet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Expanded and SPDR FactSet

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

The idea behind iShares Expanded Tech and SPDR FactSet Innovative 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.