Correlation Between SPDR Barclays and IShares Edge
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and IShares Edge 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 Barclays and IShares Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Intermediate and iShares Edge Investment, you can compare the effects of market volatilities on SPDR Barclays and IShares Edge 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 Barclays with a short position of IShares Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and IShares Edge.
Diversification Opportunities for SPDR Barclays and IShares Edge
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and iShares Edge Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge Investment and SPDR Barclays 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 Barclays Intermediate are associated (or correlated) with IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge Investment has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and IShares Edge go up and down completely randomly.
Pair Corralation between SPDR Barclays and IShares Edge
Given the investment horizon of 90 days SPDR Barclays Intermediate is expected to generate 0.66 times more return on investment than IShares Edge. However, SPDR Barclays Intermediate is 1.52 times less risky than IShares Edge. It trades about -0.17 of its potential returns per unit of risk. iShares Edge Investment is currently generating about -0.2 per unit of risk. If you would invest 3,234 in SPDR Barclays Intermediate on January 18, 2024 and sell it today you would lose (32.00) from holding SPDR Barclays Intermediate or give up 0.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR Barclays Intermediate vs. iShares Edge Investment
Performance |
Timeline |
SPDR Barclays Interm |
iShares Edge Investment |
SPDR Barclays and IShares Edge Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Barclays and IShares Edge
The main advantage of trading using opposite SPDR Barclays and IShares Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, IShares Edge 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 Edge will offset losses from the drop in IShares Edge's long position.SPDR Barclays vs. Fidelity Limited Term | SPDR Barclays vs. Fidelity Total Bond | SPDR Barclays vs. Fidelity High Yield | SPDR Barclays vs. Fidelity Low Volatility |
IShares Edge vs. Fidelity Limited Term | IShares Edge vs. Fidelity Total Bond | IShares Edge vs. Fidelity High Yield | IShares Edge vs. Fidelity Low Volatility |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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