Correlation Between Invesco SP and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Invesco SP and SPDR SSGA 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 Invesco SP and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SP International and SPDR SSGA Large, you can compare the effects of market volatilities on Invesco SP and SPDR SSGA 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 Invesco SP with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and SPDR SSGA.
Diversification Opportunities for Invesco SP and SPDR SSGA
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and SPDR is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP International and SPDR SSGA Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Large and Invesco 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 Invesco SP International are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Large has no effect on the direction of Invesco SP i.e., Invesco SP and SPDR SSGA go up and down completely randomly.
Pair Corralation between Invesco SP and SPDR SSGA
Given the investment horizon of 90 days Invesco SP International is expected to under-perform the SPDR SSGA. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP International is 1.05 times less risky than SPDR SSGA. The etf trades about -0.19 of its potential returns per unit of risk. The SPDR SSGA Large is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 17,003 in SPDR SSGA Large on August 29, 2024 and sell it today you would earn a total of 694.00 from holding SPDR SSGA Large or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SP International vs. SPDR SSGA Large
Performance |
| Timeline |
| Invesco SP International |
| SPDR SSGA Large |
Invesco SP and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and SPDR SSGA
The main advantage of trading using opposite Invesco SP and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, SPDR SSGA 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 SPDR SSGA will offset losses from the drop in SPDR SSGA's long position.| Invesco SP vs. Dimensional Core Equity | Invesco SP vs. Dimensional Emerging Core | Invesco SP vs. Dimensional Targeted Value | Invesco SP vs. Dimensional Small Cap |
| SPDR SSGA vs. SPDR SSGA Small | SPDR SSGA vs. SPDR MSCI USA | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. Invesco SP SmallCap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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