Correlation Between SPDR SP and IShares SP

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IShares SP 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 SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Dividend and IShares SP 500, you can compare the effects of market volatilities on SPDR SP and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares SP.

Diversification Opportunities for SPDR SP and IShares SP

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between SPDR and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Dividend and IShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares SP 500 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 Dividend are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares SP 500 has no effect on the direction of SPDR SP i.e., SPDR SP and IShares SP go up and down completely randomly.

Pair Corralation between SPDR SP and IShares SP

Considering the 90-day investment horizon SPDR SP Dividend is expected to generate 1.19 times more return on investment than IShares SP. However, SPDR SP is 1.19 times more volatile than IShares SP 500. It trades about 0.41 of its potential returns per unit of risk. IShares SP 500 is currently generating about 0.42 per unit of risk. If you would invest  12,461  in SPDR SP Dividend on December 29, 2023 and sell it today you would earn a total of  628.00  from holding SPDR SP Dividend or generate 5.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

SPDR SP Dividend  vs.  IShares SP 500

 Performance 
       Timeline  
SPDR SP Dividend 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SPDR SP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
IShares SP 500 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in IShares SP 500 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, IShares SP may actually be approaching a critical reversion point that can send shares even higher in April 2024.

SPDR SP and IShares SP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR SP and IShares SP

The main advantage of trading using opposite SPDR SP and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.
The idea behind SPDR SP Dividend and IShares SP 500 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

Other Complementary Tools

CEOs Directory
Screen CEOs from public companies around the world
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios