Correlation Between SPDR SPASX and IShares China
Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and IShares China 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 SPASX and IShares China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SPASX 200 and iShares China LargeCap, you can compare the effects of market volatilities on SPDR SPASX and IShares China 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 SPASX with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and IShares China.
Diversification Opportunities for SPDR SPASX and IShares China
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPDR and IShares is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and iShares China LargeCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China LargeCap and SPDR SPASX 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 SPASX 200 are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China LargeCap has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and IShares China go up and down completely randomly.
Pair Corralation between SPDR SPASX and IShares China
Assuming the 90 days trading horizon SPDR SPASX 200 is expected to under-perform the IShares China. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SPASX 200 is 1.47 times less risky than IShares China. The etf trades about -0.04 of its potential returns per unit of risk. The iShares China LargeCap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,492 in iShares China LargeCap on December 2, 2024 and sell it today you would earn a total of 1,148 from holding iShares China LargeCap or generate 25.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR SPASX 200 vs. iShares China LargeCap
Performance |
Timeline |
SPDR SPASX 200 |
iShares China LargeCap |
SPDR SPASX and IShares China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SPASX and IShares China
The main advantage of trading using opposite SPDR SPASX and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.SPDR SPASX vs. SPDR SPASX 200 | SPDR SPASX vs. SPDR SPASX 50 | SPDR SPASX vs. SPDR MSCI World | SPDR SPASX vs. SPDR Dow Jones |
IShares China vs. iShares MSCI Emerging | IShares China vs. iShares Global Aggregate | IShares China vs. iShares CoreSP MidCap | IShares China vs. iShares SP 500 |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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