Correlation Between SPDR DoubleLine and IShares Core

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

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

Diversification Opportunities for SPDR DoubleLine and IShares Core

0.99

Correlation Coefficient

SPDR DoubleLine  IShares Core

No risk reduction

The 3 months correlation between SPDR and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR DoubleLine Total and iShares Core Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Total and SPDR DoubleLine 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 DoubleLine Total are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Total has no effect on the direction of SPDR DoubleLine i.e., SPDR DoubleLine and IShares Core go up and down completely randomly.

Pair Corralation between SPDR DoubleLine and IShares Core

Given the investment horizon of 90 days SPDR DoubleLine Total is expected to generate 1.01 times more return on investment than IShares Core. However, SPDR DoubleLine is 1.01 times more volatile than iShares Core Total. It trades about 0.15 of its potential returns per unit of risk. iShares Core Total is currently generating about 0.14 per unit of risk. If you would invest  3,897  in SPDR DoubleLine Total on December 27, 2024 and sell it today you would earn a total of  100.00  from holding SPDR DoubleLine Total or generate 2.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

SPDR DoubleLine Total  vs.  iShares Core Total

SPDR DoubleLine Total

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR DoubleLine Total are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SPDR DoubleLine is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

iShares Core Total

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Total are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR DoubleLine and IShares Core

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

The idea behind SPDR DoubleLine Total and iShares Core Total 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.