Correlation Between SPDR Portfolio and IShares Global

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

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

Diversification Opportunities for SPDR Portfolio and IShares Global

-0.6

Correlation Coefficient

SPDR Portfolio  IShares Global

Excellent diversification

The 3 months correlation between SPDR and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and iShares Global REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global REIT and SPDR Portfolio 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 Portfolio SP are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global REIT has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and IShares Global go up and down completely randomly.

Pair Corralation between SPDR Portfolio and IShares Global

Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 0.9 times more return on investment than IShares Global. However, SPDR Portfolio SP is 1.11 times less risky than IShares Global. It trades about 0.18 of its potential returns per unit of risk. iShares Global REIT is currently generating about -0.12 per unit of risk. If you would invest  6,857  in SPDR Portfolio SP on September 17, 2024 and sell it today you would earn a total of  543.00  from holding SPDR Portfolio SP or generate 7.92% return on investment over 90 days.

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

SPDR Portfolio SP  vs.  iShares Global REIT

SPDR Portfolio SP

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio SP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, SPDR Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Global REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, IShares Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR Portfolio and IShares Global

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

The idea behind SPDR Portfolio SP and iShares Global REIT 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.