Correlation Between SPDR Barclays and IShares Core

Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and IShares Core 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 Core 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 Core Aggregate, you can compare the effects of market volatilities on SPDR Barclays and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and IShares Core.

Diversification Opportunities for SPDR Barclays and IShares Core

0.91

Correlation Coefficient

SPDR Barclays  IShares Core

Almost no diversification

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

Pair Corralation between SPDR Barclays and IShares Core

Given the investment horizon of 90 days SPDR Barclays Intermediate is expected to generate 0.72 times more return on investment than IShares Core. However, SPDR Barclays Intermediate is 1.4 times less risky than IShares Core. It trades about 0.0 of its potential returns per unit of risk. iShares Core Aggregate is currently generating about -0.07 per unit of risk. If you would invest  3,237  in SPDR Barclays Intermediate on February 4, 2024 and sell it today you would earn a total of  0.00  from holding SPDR Barclays Intermediate or generate 0.0% return on investment 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 Core Aggregate

SPDR Barclays Interm

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Intermediate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, SPDR Barclays is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

iShares Core Aggregate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Core is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPDR Barclays and IShares Core

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

The idea behind SPDR Barclays Intermediate and iShares Core Aggregate 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.