Correlation Between SPDR SP and IShares China
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SP 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 SP China and iShares China Large Cap, you can compare the effects of market volatilities on SPDR SP 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 SP with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares China.
Diversification Opportunities for SPDR SP and IShares China
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China and iShares China Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China Large 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 China 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 Large has no effect on the direction of SPDR SP i.e., SPDR SP and IShares China go up and down completely randomly.
Pair Corralation between SPDR SP and IShares China
Considering the 90-day investment horizon SPDR SP is expected to generate 1.25 times less return on investment than IShares China. But when comparing it to its historical volatility, SPDR SP China is 1.18 times less risky than IShares China. It trades about 0.26 of its potential returns per unit of risk. iShares China Large Cap is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,445 in iShares China Large Cap on February 3, 2024 and sell it today you would earn a total of 270.00 from holding iShares China Large Cap or generate 11.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR SP China vs. iShares China Large Cap
Performance |
Timeline |
SPDR SP China |
iShares China Large |
SPDR SP and IShares China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SP and IShares China
The main advantage of trading using opposite SPDR SP and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SP vs. Aquagold International | SPDR SP vs. Morningstar Unconstrained Allocation | SPDR SP vs. High Yield Municipal Fund | SPDR SP vs. Thrivent High Yield |
IShares China vs. Aquagold International | IShares China vs. Morningstar Unconstrained Allocation | IShares China vs. High Yield Municipal Fund | IShares China vs. Thrivent High Yield |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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