Correlation Between SPDR SP and Invesco China
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Invesco China 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 SP and Invesco China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP China and Invesco China Technology, you can compare the effects of market volatilities on SPDR SP and Invesco China 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 SP with a short position of Invesco China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Invesco China.
Diversification Opportunities for SPDR SP and Invesco China
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China and Invesco China Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco China Technology and SPDR SP 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 SP China are associated (or correlated) with Invesco China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco China Technology has no effect on the direction of SPDR SP i.e., SPDR SP and Invesco China go up and down completely randomly.
Pair Corralation between SPDR SP and Invesco China
Considering the 90-day investment horizon SPDR SP is expected to generate 1.71 times less return on investment than Invesco China. But when comparing it to its historical volatility, SPDR SP China is 1.16 times less risky than Invesco China. It trades about 0.08 of its potential returns per unit of risk. Invesco China Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,146 in Invesco China Technology on August 29, 2024 and sell it today you would earn a total of 738.00 from holding Invesco China Technology or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP China vs. Invesco China Technology
Performance |
| Timeline |
| SPDR SP China |
| Invesco China Technology |
SPDR SP and Invesco China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Invesco China
The main advantage of trading using opposite SPDR SP and Invesco China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Invesco China 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 China will offset losses from the drop in Invesco China's long position.| SPDR SP vs. Invesco Golden Dragon | SPDR SP vs. iShares MSCI Hong | SPDR SP vs. iShares MSCI China | SPDR SP vs. iShares China Large Cap |
| Invesco China vs. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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