Correlation Between IShares National and Spinnaker ETF

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

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

Diversification Opportunities for IShares National and Spinnaker ETF

0.91

Correlation Coefficient

IShares National  Spinnaker ETF

Almost no diversification

The 3 months correlation between IShares and Spinnaker is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares National Muni and Spinnaker ETF Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spinnaker ETF Series and IShares National 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 iShares National Muni are associated (or correlated) with Spinnaker ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spinnaker ETF Series has no effect on the direction of IShares National i.e., IShares National and Spinnaker ETF go up and down completely randomly.

Pair Corralation between IShares National and Spinnaker ETF

Considering the 90-day investment horizon iShares National Muni is expected to generate 1.49 times more return on investment than Spinnaker ETF. However, IShares National is 1.49 times more volatile than Spinnaker ETF Series. It trades about 0.07 of its potential returns per unit of risk. Spinnaker ETF Series is currently generating about 0.03 per unit of risk. If you would invest  10,716  in iShares National Muni on September 3, 2024 and sell it today you would earn a total of  138.00  from holding iShares National Muni or generate 1.29% return on investment over 90 days.

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

iShares National Muni  vs.  Spinnaker ETF Series

iShares National Muni

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares National Muni are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Spinnaker ETF Series

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spinnaker ETF Series are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Spinnaker ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares National and Spinnaker ETF

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

The idea behind iShares National Muni and Spinnaker ETF Series 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.