Correlation Between IShares Russell and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both IShares Russell and SPDR Barclays 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 Russell and SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 2000 and SPDR Barclays Intermediate, you can compare the effects of market volatilities on IShares Russell and SPDR Barclays 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 Russell with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and SPDR Barclays.
Diversification Opportunities for IShares Russell and SPDR Barclays
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and SPDR is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 2000 and SPDR Barclays Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Interm and IShares Russell 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 Russell 2000 are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Interm has no effect on the direction of IShares Russell i.e., IShares Russell and SPDR Barclays go up and down completely randomly.
Pair Corralation between IShares Russell and SPDR Barclays
Considering the 90-day investment horizon IShares Russell is expected to generate 1.62 times less return on investment than SPDR Barclays. In addition to that, IShares Russell is 4.38 times more volatile than SPDR Barclays Intermediate. It trades about 0.01 of its total potential returns per unit of risk. SPDR Barclays Intermediate is currently generating about 0.06 per unit of volatility. If you would invest 3,114 in SPDR Barclays Intermediate on January 24, 2024 and sell it today you would earn a total of 99.00 from holding SPDR Barclays Intermediate or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
iShares Russell 2000 vs. SPDR Barclays Intermediate
Performance |
| Timeline |
| iShares Russell 2000 |
| SPDR Barclays Interm |
IShares Russell and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and SPDR Barclays
The main advantage of trading using opposite IShares Russell and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' long position.| IShares Russell vs. First Trust RiverFront | IShares Russell vs. First Trust RiverFront | IShares Russell vs. Arrow DWA Tactical | IShares Russell vs. First Trust Developed |
| SPDR Barclays vs. iShares iBonds 2026 | SPDR Barclays vs. iShares iBonds Dec | SPDR Barclays vs. iShares 25 Year |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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