Correlation Between IShares Expanded and SPDR Bloomberg

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

By analyzing existing cross correlation between iShares Expanded Tech Software and SPDR Bloomberg Emerging, you can compare the effects of market volatilities on IShares Expanded and SPDR Bloomberg 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 Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and SPDR Bloomberg.

Diversification Opportunities for IShares Expanded and SPDR Bloomberg

-0.47

Correlation Coefficient

IShares Expanded  SPDR Bloomberg

Very good diversification

The 3 months correlation between IShares and SPDR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech Software and SPDR Bloomberg Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Emerging 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 Software are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Emerging has no effect on the direction of IShares Expanded i.e., IShares Expanded and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between IShares Expanded and SPDR Bloomberg

Considering the 90-day investment horizon iShares Expanded Tech Software is expected to under-perform the SPDR Bloomberg. In addition to that, IShares Expanded is 4.12 times more volatile than SPDR Bloomberg Emerging. It trades about -0.07 of its total potential returns per unit of risk. SPDR Bloomberg Emerging is currently generating about 0.13 per unit of volatility. If you would invest  1,940  in SPDR Bloomberg Emerging on December 28, 2024 and sell it today you would earn a total of  63.00  from holding SPDR Bloomberg Emerging or generate 3.25% return on investment over 90 days.

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

iShares Expanded Tech Software  vs.  SPDR Bloomberg Emerging

iShares Expanded Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Expanded Tech Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

SPDR Bloomberg Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Emerging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Expanded and SPDR Bloomberg

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

The idea behind iShares Expanded Tech Software and SPDR Bloomberg Emerging 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.