Correlation Between SPDR SP and IShares Broker

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

By analyzing existing cross correlation between SPDR SP Bank and iShares Broker Dealers Securities, you can compare the effects of market volatilities on SPDR SP and IShares Broker 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 Broker. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Broker.

Diversification Opportunities for SPDR SP and IShares Broker

0.9

Correlation Coefficient

SPDR SP  IShares Broker

Almost no diversification

The 3 months correlation between SPDR and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Bank and iShares Broker Dealers Securit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broker Dealers 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 Bank are associated (or correlated) with IShares Broker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broker Dealers has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Broker go up and down completely randomly.

Pair Corralation between SPDR SP and IShares Broker

Considering the 90-day investment horizon SPDR SP Bank is expected to under-perform the IShares Broker. In addition to that, SPDR SP is 1.14 times more volatile than iShares Broker Dealers Securities. It trades about -0.26 of its total potential returns per unit of risk. iShares Broker Dealers Securities is currently generating about -0.14 per unit of volatility. If you would invest  15,061  in iShares Broker Dealers Securities on October 12, 2024 and sell it today you would lose (534.00) from holding iShares Broker Dealers Securities or give up 3.55% of portfolio value over 90 days.

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

SPDR SP Bank  vs.  iShares Broker Dealers Securit

SPDR SP Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, SPDR SP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Broker Dealers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Broker Dealers Securities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, IShares Broker may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SPDR SP and IShares Broker

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

The idea behind SPDR SP Bank and iShares Broker Dealers Securities 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.