Correlation Between SPDR Barclays and Invesco Markets
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Invesco Markets 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 Barclays and Invesco Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays 10 and Invesco Markets II, you can compare the effects of market volatilities on SPDR Barclays and Invesco Markets 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 Barclays with a short position of Invesco Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Invesco Markets.
Diversification Opportunities for SPDR Barclays and Invesco Markets
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays 10 and Invesco Markets II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Markets II and SPDR Barclays 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 Barclays 10 are associated (or correlated) with Invesco Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Markets II has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Invesco Markets go up and down completely randomly.
Pair Corralation between SPDR Barclays and Invesco Markets
Assuming the 90 days trading horizon SPDR Barclays 10 is expected to generate 0.33 times more return on investment than Invesco Markets. However, SPDR Barclays 10 is 3.0 times less risky than Invesco Markets. It trades about 0.15 of its potential returns per unit of risk. Invesco Markets II is currently generating about -0.06 per unit of risk. If you would invest 2,729 in SPDR Barclays 10 on September 1, 2024 and sell it today you would earn a total of 61.00 from holding SPDR Barclays 10 or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays 10 vs. Invesco Markets II
Performance |
| Timeline |
| SPDR Barclays 10 |
| Invesco Markets II |
SPDR Barclays and Invesco Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Invesco Markets
The main advantage of trading using opposite SPDR Barclays and Invesco Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Invesco Markets 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 Markets will offset losses from the drop in Invesco Markets' long position.| SPDR Barclays vs. SPDR Dow Jones | SPDR Barclays vs. SPDR SP Dividend | SPDR Barclays vs. SPDR Barclays Euro | SPDR Barclays vs. SPDR SP Consumer |
| Invesco Markets vs. Invesco MSCI Emerging | Invesco Markets vs. Invesco EURO STOXX | Invesco Markets vs. Invesco Markets Plc | Invesco Markets vs. Invesco FTSE RAFI |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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