Correlation Between SPDR Barclays and Invesco Solar
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Invesco Solar 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 Solar 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 Solar Energy, you can compare the effects of market volatilities on SPDR Barclays and Invesco Solar 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 Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Invesco Solar.
Diversification Opportunities for SPDR Barclays and Invesco Solar
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Invesco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays 10 and Invesco Solar Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Solar Energy 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 Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Solar Energy has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Invesco Solar go up and down completely randomly.
Pair Corralation between SPDR Barclays and Invesco Solar
Assuming the 90 days trading horizon SPDR Barclays 10 is expected to generate 0.24 times more return on investment than Invesco Solar. However, SPDR Barclays 10 is 4.13 times less risky than Invesco Solar. It trades about 0.02 of its potential returns per unit of risk. Invesco Solar Energy is currently generating about -0.01 per unit of risk. If you would invest 2,183 in SPDR Barclays 10 on September 2, 2024 and sell it today you would earn a total of 55.00 from holding SPDR Barclays 10 or generate 2.52% 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 Solar Energy
Performance |
| Timeline |
| SPDR Barclays 10 |
| Invesco Solar Energy |
SPDR Barclays and Invesco Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Invesco Solar
The main advantage of trading using opposite SPDR Barclays and Invesco Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Invesco Solar 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 Solar will offset losses from the drop in Invesco Solar's long position.| SPDR Barclays vs. WisdomTree Natural Gas | SPDR Barclays vs. WisdomTree Natural Gas | SPDR Barclays vs. Leverage Shares 2x | SPDR Barclays vs. WisdomTree Silver 3x |
| Invesco Solar vs. Leverage Shares 3x | Invesco Solar vs. WisdomTree Natural Gas | Invesco Solar vs. GraniteShares 3x Short | Invesco Solar vs. Leverage Shares 3x |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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