Correlation Between IShares Short and SPDR Bloomberg

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Can any of the company-specific risk be diversified away by investing in both IShares Short and SPDR Bloomberg 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 Short and SPDR Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Short Maturity and SPDR Bloomberg Investment, you can compare the effects of market volatilities on IShares Short and SPDR Bloomberg 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 Short with a short position of SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and SPDR Bloomberg.

Diversification Opportunities for IShares Short and SPDR Bloomberg

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

Pair Corralation between IShares Short and SPDR Bloomberg

Given the investment horizon of 90 days iShares Short Maturity is expected to under-perform the SPDR Bloomberg. In addition to that, IShares Short is 3.37 times more volatile than SPDR Bloomberg Investment. It trades about -0.12 of its total potential returns per unit of risk. SPDR Bloomberg Investment is currently generating about 0.72 per unit of volatility. If you would invest  3,062  in SPDR Bloomberg Investment on January 20, 2024 and sell it today you would earn a total of  18.00  from holding SPDR Bloomberg Investment or generate 0.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

iShares Short Maturity  vs.  SPDR Bloomberg Investment

 Performance 
       Timeline  
iShares Short Maturity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares Short Maturity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
SPDR Bloomberg Investment 

Risk-Adjusted Performance

57 of 100

 
Weak
 
Strong
Market Crasher
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Investment are ranked lower than 57 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

IShares Short and SPDR Bloomberg Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Short and SPDR Bloomberg

The main advantage of trading using opposite IShares Short and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, SPDR Bloomberg 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 Bloomberg will offset losses from the drop in SPDR Bloomberg's long position.
The idea behind iShares Short Maturity and SPDR Bloomberg Investment 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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