Correlation Between Invesco DWA and Jacob Forward
Can any of the company-specific risk be diversified away by investing in both Invesco DWA and Jacob Forward 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 Invesco DWA and Jacob Forward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DWA SmallCap and Jacob Forward ETF, you can compare the effects of market volatilities on Invesco DWA and Jacob Forward 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 Invesco DWA with a short position of Jacob Forward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and Jacob Forward.
Diversification Opportunities for Invesco DWA and Jacob Forward
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Jacob is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA SmallCap and Jacob Forward ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Forward ETF and Invesco DWA 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 Invesco DWA SmallCap are associated (or correlated) with Jacob Forward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Forward ETF has no effect on the direction of Invesco DWA i.e., Invesco DWA and Jacob Forward go up and down completely randomly.
Pair Corralation between Invesco DWA and Jacob Forward
Given the investment horizon of 90 days Invesco DWA is expected to generate 1.29 times less return on investment than Jacob Forward. But when comparing it to its historical volatility, Invesco DWA SmallCap is 1.17 times less risky than Jacob Forward. It trades about 0.31 of its potential returns per unit of risk. Jacob Forward ETF is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,078 in Jacob Forward ETF on September 1, 2024 and sell it today you would earn a total of 187.00 from holding Jacob Forward ETF or generate 17.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco DWA SmallCap vs. Jacob Forward ETF
Performance |
| Timeline |
| Invesco DWA SmallCap |
| Jacob Forward ETF |
Invesco DWA and Jacob Forward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DWA and Jacob Forward
The main advantage of trading using opposite Invesco DWA and Jacob Forward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DWA position performs unexpectedly, Jacob Forward 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 Jacob Forward will offset losses from the drop in Jacob Forward's long position.| Invesco DWA vs. Invesco DWA Momentum | Invesco DWA vs. Invesco DWA Developed | Invesco DWA vs. Invesco DWA Emerging | Invesco DWA vs. First Trust Small |
| Jacob Forward vs. iShares SP Mid Cap | Jacob Forward vs. iShares SP Small Cap | Jacob Forward vs. iShares SP Mid Cap | Jacob Forward vs. iShares SP 500 |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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