Correlation Between SPDR Kensho and Invesco SP
Can any of the company-specific risk be diversified away by investing in both SPDR Kensho 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 SPDR Kensho and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Kensho New and Invesco SP SmallCap, you can compare the effects of market volatilities on SPDR Kensho 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 SPDR Kensho with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and Invesco SP.
Diversification Opportunities for SPDR Kensho and Invesco SP
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Invesco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap and SPDR Kensho 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 Kensho New 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 SmallCap has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and Invesco SP go up and down completely randomly.
Pair Corralation between SPDR Kensho and Invesco SP
Given the investment horizon of 90 days SPDR Kensho New is expected to generate 0.88 times more return on investment than Invesco SP. However, SPDR Kensho New is 1.13 times less risky than Invesco SP. It trades about 0.05 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about 0.03 per unit of risk. If you would invest 4,014 in SPDR Kensho New on August 27, 2024 and sell it today you would earn a total of 1,335 from holding SPDR Kensho New or generate 33.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Kensho New vs. Invesco SP SmallCap
Performance |
| Timeline |
| SPDR Kensho New |
| Invesco SP SmallCap |
SPDR Kensho and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Kensho and Invesco SP
The main advantage of trading using opposite SPDR Kensho and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho 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.| SPDR Kensho vs. SPDR Kensho Clean | SPDR Kensho vs. SPDR SP Kensho | SPDR Kensho vs. SPDR SP Kensho | SPDR Kensho vs. SPDR SP Kensho |
| Invesco SP vs. Invesco SP SmallCap | Invesco SP vs. Invesco SP SmallCap | Invesco SP vs. Invesco SP SmallCap | Invesco SP 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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