Correlation Between SPDR FactSet and IShares Global

Can any of the company-specific risk be diversified away by investing in both SPDR FactSet 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 FactSet 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 FactSet Innovative and iShares Global Tech, you can compare the effects of market volatilities on SPDR FactSet 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 FactSet with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR FactSet and IShares Global.

Diversification Opportunities for SPDR FactSet and IShares Global

0.78

Correlation Coefficient

SPDR FactSet  IShares Global

Poor diversification

The 3 months correlation between SPDR and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SPDR FactSet Innovative and iShares Global Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Tech and SPDR FactSet 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 FactSet Innovative 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 Tech has no effect on the direction of SPDR FactSet i.e., SPDR FactSet and IShares Global go up and down completely randomly.

Pair Corralation between SPDR FactSet and IShares Global

Given the investment horizon of 90 days SPDR FactSet Innovative is expected to under-perform the IShares Global. In addition to that, SPDR FactSet is 1.46 times more volatile than iShares Global Tech. It trades about -0.03 of its total potential returns per unit of risk. iShares Global Tech is currently generating about 0.2 per unit of volatility. If you would invest  8,367  in iShares Global Tech on September 27, 2024 and sell it today you would earn a total of  390.00  from holding iShares Global Tech or generate 4.66% return on investment over 90 days.

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

SPDR FactSet Innovative  vs.  iShares Global Tech

SPDR FactSet Innovative

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR FactSet Innovative are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SPDR FactSet disclosed solid returns over the last few months and may actually be approaching a breakup point.

iShares Global Tech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Tech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SPDR FactSet and IShares Global

The main advantage of trading using opposite SPDR FactSet and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FactSet 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 FactSet Innovative and iShares Global Tech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.