Correlation Between SPDR Series and Invesco SP
Can any of the company-specific risk be diversified away by investing in both SPDR Series and Invesco 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 SPDR Series and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Series Trust and Invesco SP 500, you can compare the effects of market volatilities on SPDR Series and Invesco 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 SPDR Series with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Series and Invesco SP.
Diversification Opportunities for SPDR Series and Invesco SP
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Invesco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Series Trust and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and SPDR Series 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 Series Trust are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of SPDR Series i.e., SPDR Series and Invesco SP go up and down completely randomly.
Pair Corralation between SPDR Series and Invesco SP
Given the investment horizon of 90 days SPDR Series is expected to generate 15.77 times less return on investment than Invesco SP. But when comparing it to its historical volatility, SPDR Series Trust is 61.57 times less risky than Invesco SP. It trades about 1.21 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 5,734 in Invesco SP 500 on November 2, 2024 and sell it today you would earn a total of 276.00 from holding Invesco SP 500 or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Series Trust vs. Invesco SP 500
Performance |
| Timeline |
| SPDR Series Trust |
| Invesco SP 500 |
SPDR Series and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Series and Invesco SP
The main advantage of trading using opposite SPDR Series and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Series position performs unexpectedly, Invesco 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 Invesco SP will offset losses from the drop in Invesco SP's long position.| SPDR Series vs. WisdomTree Floating Rate | SPDR Series vs. iShares 0 3 Month | SPDR Series vs. SPDR Bloomberg 1 3 | SPDR Series vs. iShares Treasury Floating |
| Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP MidCap | Invesco SP vs. Invesco SP SmallCap |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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