Correlation Between SPDR SP and IShares Latin

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

By analyzing existing cross correlation between SPDR SP Emerging and iShares Latin America, you can compare the effects of market volatilities on SPDR SP and IShares Latin 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 Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IShares Latin.

Diversification Opportunities for SPDR SP and IShares Latin

0.2

Correlation Coefficient

SPDR SP  IShares Latin

Modest diversification

The 3 months correlation between SPDR and IShares is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Emerging and iShares Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Latin America 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 Emerging are associated (or correlated) with IShares Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Latin America has no effect on the direction of SPDR SP i.e., SPDR SP and IShares Latin go up and down completely randomly.

Pair Corralation between SPDR SP and IShares Latin

Considering the 90-day investment horizon SPDR SP Emerging is expected to generate 1.36 times more return on investment than IShares Latin. However, SPDR SP is 1.36 times more volatile than iShares Latin America. It trades about 0.09 of its potential returns per unit of risk. iShares Latin America is currently generating about -0.16 per unit of risk. If you would invest  11,235  in SPDR SP Emerging on September 13, 2024 and sell it today you would earn a total of  791.00  from holding SPDR SP Emerging or generate 7.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SPDR SP Emerging  vs.  iShares Latin America

SPDR SP Emerging

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Emerging are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Latin America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Latin America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with SPDR SP and IShares Latin

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

The idea behind SPDR SP Emerging and iShares Latin America 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.