Correlation Between IShares SPTSX and Purpose International

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

By analyzing existing cross correlation between iShares SPTSX Capped and Purpose International Dividend, you can compare the effects of market volatilities on IShares SPTSX and Purpose International 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 SPTSX with a short position of Purpose International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Purpose International.

Diversification Opportunities for IShares SPTSX and Purpose International

0.83

Correlation Coefficient

IShares SPTSX  Purpose International

Very poor diversification

The 3 months correlation between IShares and Purpose is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Purpose International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose International and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with Purpose International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose International has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Purpose International go up and down completely randomly.

Pair Corralation between IShares SPTSX and Purpose International

Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 1.91 times more return on investment than Purpose International. However, IShares SPTSX is 1.91 times more volatile than Purpose International Dividend. It trades about 0.16 of its potential returns per unit of risk. Purpose International Dividend is currently generating about 0.13 per unit of risk. If you would invest  6,460  in iShares SPTSX Capped on April 25, 2025 and sell it today you would earn a total of  861.00  from holding iShares SPTSX Capped or generate 13.33% return on investment over 90 days.

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

iShares SPTSX Capped  vs.  Purpose International Dividend

iShares SPTSX Capped

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares SPTSX displayed solid returns over the last few months and may actually be approaching a breakup point.

Purpose International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose International Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Purpose International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares SPTSX and Purpose International

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

The idea behind iShares SPTSX Capped and Purpose International Dividend 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.