Correlation Between Consumer Staples and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both Consumer Staples and Invesco Technology 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 Consumer Staples and Invesco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Portfolio and Invesco Technology Fund, you can compare the effects of market volatilities on Consumer Staples and Invesco Technology 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 Consumer Staples with a short position of Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and Invesco Technology.
Diversification Opportunities for Consumer Staples and Invesco Technology
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Consumer and Invesco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Portfolio and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Consumer Staples 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 Consumer Staples Portfolio are associated (or correlated) with Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of Consumer Staples i.e., Consumer Staples and Invesco Technology go up and down completely randomly.
Pair Corralation between Consumer Staples and Invesco Technology
Assuming the 90 days horizon Consumer Staples is expected to generate 33.67 times less return on investment than Invesco Technology. But when comparing it to its historical volatility, Consumer Staples Portfolio is 1.87 times less risky than Invesco Technology. It trades about 0.01 of its potential returns per unit of risk. Invesco Technology Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 6,806 in Invesco Technology Fund on August 29, 2024 and sell it today you would earn a total of 587.00 from holding Invesco Technology Fund or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Staples Portfolio vs. Invesco Technology Fund
Performance |
| Timeline |
| Consumer Staples Por |
| Invesco Technology |
Consumer Staples and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Staples and Invesco Technology
The main advantage of trading using opposite Consumer Staples and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples position performs unexpectedly, Invesco Technology 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 Technology will offset losses from the drop in Invesco Technology's long position.| Consumer Staples vs. Kellanova | Consumer Staples vs. Bunge Limited | Consumer Staples vs. BJs Wholesale Club | Consumer Staples vs. Colgate Palmolive |
| Invesco Technology vs. Pioneer High Income | Invesco Technology vs. Artisan High Income | Invesco Technology vs. Pace High Yield | Invesco Technology vs. Morningstar Aggressive Growth |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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