Correlation Between SPDR Portfolio and IShares Global

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

By analyzing existing cross correlation between SPDR Portfolio MSCI and iShares Global 100, you can compare the effects of market volatilities on SPDR Portfolio and IShares Global 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 Portfolio with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and IShares Global.

Diversification Opportunities for SPDR Portfolio and IShares Global

0.93

Correlation Coefficient

SPDR Portfolio  IShares Global

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 Portfolio MSCI and iShares Global 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global 100 and SPDR Portfolio 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 Portfolio MSCI are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global 100 has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and IShares Global go up and down completely randomly.

Pair Corralation between SPDR Portfolio and IShares Global

Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.27 times less return on investment than IShares Global. But when comparing it to its historical volatility, SPDR Portfolio MSCI is 1.18 times less risky than IShares Global. It trades about 0.12 of its potential returns per unit of risk. iShares Global 100 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  9,679  in iShares Global 100 on September 14, 2024 and sell it today you would earn a total of  590.00  from holding iShares Global 100 or generate 6.1% return on investment over 90 days.

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

SPDR Portfolio MSCI  vs.  iShares Global 100

SPDR Portfolio MSCI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio MSCI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, SPDR Portfolio is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

iShares Global 100

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global 100 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR Portfolio and IShares Global

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

The idea behind SPDR Portfolio MSCI and iShares Global 100 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.