Correlation Between IShares Utilities and Invesco SP
Can any of the company-specific risk be diversified away by investing in both IShares Utilities 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 IShares Utilities and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Utilities ETF and Invesco SP 500, you can compare the effects of market volatilities on IShares Utilities 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 IShares Utilities with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Utilities and Invesco SP.
Diversification Opportunities for IShares Utilities and Invesco SP
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Invesco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Utilities ETF 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 IShares Utilities 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 iShares Utilities ETF 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 IShares Utilities i.e., IShares Utilities and Invesco SP go up and down completely randomly.
Pair Corralation between IShares Utilities and Invesco SP
Considering the 90-day investment horizon iShares Utilities ETF is expected to generate 1.74 times more return on investment than Invesco SP. However, IShares Utilities is 1.74 times more volatile than Invesco SP 500. It trades about 0.09 of its potential returns per unit of risk. Invesco SP 500 is currently generating about -0.07 per unit of risk. If you would invest 10,157 in iShares Utilities ETF on August 26, 2024 and sell it today you would earn a total of 207.00 from holding iShares Utilities ETF or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Utilities ETF vs. Invesco SP 500
Performance |
| Timeline |
| iShares Utilities ETF |
| Invesco SP 500 |
IShares Utilities and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Utilities and Invesco SP
The main advantage of trading using opposite IShares Utilities and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Utilities 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.| IShares Utilities vs. Global X CleanTech | IShares Utilities vs. Global X Clean | IShares Utilities vs. Global X Wind | IShares Utilities vs. Global X Thematic |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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