Correlation Between SPDR Nuveen and IShares National

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

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

Diversification Opportunities for SPDR Nuveen and IShares National

0.89

Correlation Coefficient

SPDR Nuveen  IShares National

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 Nuveen Bloomberg and iShares National Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares National Muni and SPDR Nuveen 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 Nuveen Bloomberg are associated (or correlated) with IShares National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares National Muni has no effect on the direction of SPDR Nuveen i.e., SPDR Nuveen and IShares National go up and down completely randomly.

Pair Corralation between SPDR Nuveen and IShares National

Considering the 90-day investment horizon SPDR Nuveen is expected to generate 1.29 times less return on investment than IShares National. But when comparing it to its historical volatility, SPDR Nuveen Bloomberg is 1.98 times less risky than IShares National. It trades about 0.18 of its potential returns per unit of risk. iShares National Muni is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,437  in iShares National Muni on August 30, 2024 and sell it today you would earn a total of  392.00  from holding iShares National Muni or generate 3.76% return on investment over 90 days.

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

SPDR Nuveen Bloomberg  vs.  iShares National Muni

SPDR Nuveen Bloomberg

Risk-Adjusted Performance

2 of 100

Weak

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

iShares National Muni

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares National Muni are ranked lower than 6 (%) 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.

Pair Trading with SPDR Nuveen and IShares National

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

The idea behind SPDR Nuveen Bloomberg and iShares National Muni 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.