Correlation Between SSgA SPDR and Invesco Markets
Can any of the company-specific risk be diversified away by investing in both SSgA SPDR and Invesco Markets 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 Invesco Markets 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 Invesco Markets III, you can compare the effects of market volatilities on SSgA SPDR and Invesco Markets 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 Invesco Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and Invesco Markets.
Diversification Opportunities for SSgA SPDR and Invesco Markets
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SSgA and Invesco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and Invesco Markets III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Markets III 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 Invesco Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Markets III has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Invesco Markets go up and down completely randomly.
Pair Corralation between SSgA SPDR and Invesco Markets
Assuming the 90 days trading horizon SSgA SPDR ETFs is expected to generate 1.61 times more return on investment than Invesco Markets. However, SSgA SPDR is 1.61 times more volatile than Invesco Markets III. It trades about 0.14 of its potential returns per unit of risk. Invesco Markets III is currently generating about 0.06 per unit of risk. If you would invest 5,224 in SSgA SPDR ETFs on October 20, 2024 and sell it today you would earn a total of 58.00 from holding SSgA SPDR ETFs or generate 1.11% 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. Invesco Markets III
Performance |
| Timeline |
| SSgA SPDR ETFs |
| Invesco Markets III |
SSgA SPDR and Invesco Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSgA SPDR and Invesco Markets
The main advantage of trading using opposite SSgA SPDR and Invesco Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA SPDR position performs unexpectedly, Invesco Markets 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 Markets will offset losses from the drop in Invesco Markets' long position.| SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs |
| Invesco Markets vs. Lyxor UCITS Japan | Invesco Markets vs. Lyxor UCITS Japan | Invesco Markets vs. Lyxor UCITS Stoxx | Invesco Markets vs. Amundi CAC 40 |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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