Correlation Between SSgA SPDR and ISHARES V

Can any of the company-specific risk be diversified away by investing in both SSgA SPDR and ISHARES V 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 SSgA SPDR and ISHARES V into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SSgA SPDR ETFs and ISHARES V PLC, you can compare the effects of market volatilities on SSgA SPDR and ISHARES V 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 SSgA SPDR with a short position of ISHARES V. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and ISHARES V.

Diversification Opportunities for SSgA SPDR and ISHARES V

0.6

Correlation Coefficient

SSgA SPDR  ISHARES V

Poor diversification

The 3 months correlation between SSgA and ISHARES is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and ISHARES V PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISHARES V PLC and SSgA SPDR 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 SSgA SPDR ETFs are associated (or correlated) with ISHARES V. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISHARES V PLC has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and ISHARES V go up and down completely randomly.

Pair Corralation between SSgA SPDR and ISHARES V

Assuming the 90 days trading horizon SSgA SPDR ETFs is expected to generate 12.56 times more return on investment than ISHARES V. However, SSgA SPDR is 12.56 times more volatile than ISHARES V PLC. It trades about 0.33 of its potential returns per unit of risk. ISHARES V PLC is currently generating about 0.32 per unit of risk. If you would invest  16,736  in SSgA SPDR ETFs on April 20, 2025 and sell it today you would earn a total of  2,770  from holding SSgA SPDR ETFs or generate 16.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SSgA SPDR ETFs  vs.  ISHARES V PLC

SSgA SPDR ETFs

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SSgA SPDR unveiled solid returns over the last few months and may actually be approaching a breakup point.

ISHARES V PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ISHARES V PLC are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ISHARES V is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SSgA SPDR and ISHARES V

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

The idea behind SSgA SPDR ETFs and ISHARES V PLC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.