Correlation Between SPDR Kensho and IShares Morningstar

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SPDR Kensho and IShares Morningstar 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 Kensho and IShares Morningstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Kensho New and iShares Morningstar Mid Cap, you can compare the effects of market volatilities on SPDR Kensho and IShares Morningstar 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 Kensho with a short position of IShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and IShares Morningstar.

Diversification Opportunities for SPDR Kensho and IShares Morningstar

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between SPDR and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and iShares Morningstar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar Mid and SPDR Kensho 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 Kensho New are associated (or correlated) with IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar Mid has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and IShares Morningstar go up and down completely randomly.

Pair Corralation between SPDR Kensho and IShares Morningstar

Given the investment horizon of 90 days SPDR Kensho New is expected to under-perform the IShares Morningstar. In addition to that, SPDR Kensho is 1.29 times more volatile than iShares Morningstar Mid Cap. It trades about -0.07 of its total potential returns per unit of risk. iShares Morningstar Mid Cap is currently generating about -0.03 per unit of volatility. If you would invest  6,837  in iShares Morningstar Mid Cap on March 24, 2024 and sell it today you would lose (32.00) from holding iShares Morningstar Mid Cap or give up 0.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

SPDR Kensho New  vs.  iShares Morningstar Mid Cap

 Performance 
       Timeline  
SPDR Kensho New 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SPDR Kensho New has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, SPDR Kensho is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
iShares Morningstar Mid 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares Morningstar Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, IShares Morningstar is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SPDR Kensho and IShares Morningstar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Kensho and IShares Morningstar

The main advantage of trading using opposite SPDR Kensho and IShares Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho position performs unexpectedly, IShares Morningstar 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 Morningstar will offset losses from the drop in IShares Morningstar's long position.
The idea behind SPDR Kensho New and iShares Morningstar Mid Cap 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Equity Valuation
Check real value of public entities based on technical and fundamental data