Correlation Between IShares Core and SPDR SP

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

By analyzing existing cross correlation between iShares Core MSCI and SPDR SP Materials, you can compare the effects of market volatilities on IShares Core and SPDR SP 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 Core with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and SPDR SP.

Diversification Opportunities for IShares Core and SPDR SP

0.86

Correlation Coefficient

IShares Core  SPDR SP

Very poor diversification

The 3 months correlation between IShares and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and SPDR SP Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Materials and IShares Core 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 Core MSCI are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Materials has no effect on the direction of IShares Core i.e., IShares Core and SPDR SP go up and down completely randomly.

Pair Corralation between IShares Core and SPDR SP

If you would invest  398.00  in iShares Core MSCI on April 21, 2025 and sell it today you would earn a total of  76.00  from holding iShares Core MSCI or generate 19.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.0%
Values	Daily Returns

iShares Core MSCI  vs.  SPDR SP Materials

iShares Core MSCI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, IShares Core reported solid returns over the last few months and may actually be approaching a breakup point.

SPDR SP Materials

Risk-Adjusted Performance

OK

Over the last 90 days SPDR SP Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak fundamental indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares Core and SPDR SP

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

The idea behind iShares Core MSCI and SPDR SP Materials 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.