Correlation Between IShares and SPDR Kensho

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

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

Diversification Opportunities for IShares and SPDR Kensho

-0.42

Correlation Coefficient

IShares  SPDR Kensho

Very good diversification

The 3 months correlation between IShares and SPDR is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding IShares and SPDR Kensho New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho New and IShares 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 are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho New has no effect on the direction of IShares i.e., IShares and SPDR Kensho go up and down completely randomly.

Pair Corralation between IShares and SPDR Kensho

If you would invest  4,734  in SPDR Kensho New on September 16, 2024 and sell it today you would earn a total of  622.00  from holding SPDR Kensho New or generate 13.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

IShares  vs.  SPDR Kensho New

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, IShares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SPDR Kensho New

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho New are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, SPDR Kensho may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares and SPDR Kensho

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

The idea behind IShares and SPDR Kensho New 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.