Correlation Between SPDR SP and Invesco Golden
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Invesco Golden 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 Golden 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 Golden Dragon, you can compare the effects of market volatilities on SPDR SP and Invesco Golden 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 Golden. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Invesco Golden.
Diversification Opportunities for SPDR SP and Invesco Golden
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Invesco is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China and Invesco Golden Dragon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Golden Dragon 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 Golden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Golden Dragon has no effect on the direction of SPDR SP i.e., SPDR SP and Invesco Golden go up and down completely randomly.
Pair Corralation between SPDR SP and Invesco Golden
Considering the 90-day investment horizon SPDR SP China is expected to generate 1.07 times more return on investment than Invesco Golden. However, SPDR SP is 1.07 times more volatile than Invesco Golden Dragon. It trades about -0.17 of its potential returns per unit of risk. Invesco Golden Dragon is currently generating about -0.23 per unit of risk. If you would invest 8,143 in SPDR SP China on August 27, 2024 and sell it today you would lose (597.00) from holding SPDR SP China or give up 7.33% of portfolio value 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 Golden Dragon
Performance |
| Timeline |
| SPDR SP China |
| Invesco Golden Dragon |
SPDR SP and Invesco Golden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Invesco Golden
The main advantage of trading using opposite SPDR SP and Invesco Golden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Invesco Golden 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 Golden will offset losses from the drop in Invesco Golden'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 Golden vs. iShares MSCI Singapore | Invesco Golden vs. iShares MSCI Malaysia | Invesco Golden vs. iShares MSCI Australia | Invesco Golden vs. iShares MSCI South |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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