Correlation Between Swan Hedged and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Swan Hedged and Invesco SP 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 Swan Hedged and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Hedged Equity and Invesco SP 500, you can compare the effects of market volatilities on Swan Hedged and Invesco SP 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 Swan Hedged with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Invesco SP.
Diversification Opportunities for Swan Hedged and Invesco SP
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swan and Invesco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Swan Hedged i.e., Swan Hedged and Invesco SP go up and down completely randomly.
Pair Corralation between Swan Hedged and Invesco SP
Given the investment horizon of 90 days Swan Hedged Equity is expected to generate 0.81 times more return on investment than Invesco SP. However, Swan Hedged Equity is 1.23 times less risky than Invesco SP. It trades about 0.14 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.1 per unit of risk. If you would invest 1,886 in Swan Hedged Equity on August 27, 2024 and sell it today you would earn a total of 389.00 from holding Swan Hedged Equity or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Hedged Equity vs. Invesco SP 500
Performance |
| Timeline |
| Swan Hedged Equity |
| Invesco SP 500 |
Swan Hedged and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swan Hedged and Invesco SP
The main advantage of trading using opposite Swan Hedged and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Hedged position performs unexpectedly, Invesco SP 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 SP will offset losses from the drop in Invesco SP's long position.| Swan Hedged vs. WisdomTree 9060 Balanced | Swan Hedged vs. RPAR Risk Parity | Swan Hedged vs. Cambria Tail Risk | Swan Hedged vs. Aptus Defined Risk |
| Invesco SP vs. WisdomTree 9060 Balanced | Invesco SP vs. RPAR Risk Parity | Invesco SP vs. Cambria Tail Risk | Invesco SP vs. Aptus Defined Risk |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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