Correlation Between IShares Short and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both IShares Short and SPDR SSgA 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 SSgA 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 SSgA Ultra, you can compare the effects of market volatilities on IShares Short and SPDR SSgA 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 SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and SPDR SSgA.
Diversification Opportunities for IShares Short and SPDR SSgA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and SPDR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and SPDR SSgA Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Ultra 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 SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Ultra has no effect on the direction of IShares Short i.e., IShares Short and SPDR SSgA go up and down completely randomly.
Pair Corralation between IShares Short and SPDR SSgA
Given the investment horizon of 90 days iShares Short Maturity is expected to under-perform the SPDR SSgA. In addition to that, IShares Short is 2.12 times more volatile than SPDR SSgA Ultra. It trades about -0.07 of its total potential returns per unit of risk. SPDR SSgA Ultra is currently generating about 0.2 per unit of volatility. If you would invest 4,025 in SPDR SSgA Ultra on January 19, 2024 and sell it today you would earn a total of 11.00 from holding SPDR SSgA Ultra or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Short Maturity vs. SPDR SSgA Ultra
Performance |
| Timeline |
| iShares Short Maturity |
| SPDR SSgA Ultra |
IShares Short and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and SPDR SSgA
The main advantage of trading using opposite IShares Short and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, SPDR SSgA 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 SSgA will offset losses from the drop in SPDR SSgA's long position.| IShares Short vs. iShares ESG 1 5 | IShares Short vs. First Trust Low | IShares Short vs. First Trust Managed | IShares Short vs. First Trust Senior |
| SPDR SSgA vs. iShares ESG 1 5 | SPDR SSgA vs. First Trust Low | SPDR SSgA vs. First Trust Managed | SPDR SSgA vs. First Trust Senior |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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