Correlation Between SPDR SP and Invesco Exchange
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Invesco Exchange 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 SP and Invesco Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP MIDCAP and Invesco Exchange Traded, you can compare the effects of market volatilities on SPDR SP and Invesco Exchange 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 SP with a short position of Invesco Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Invesco Exchange.
Diversification Opportunities for SPDR SP and Invesco Exchange
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Invesco is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and Invesco Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Exchange Traded and SPDR 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 SPDR SP MIDCAP are associated (or correlated) with Invesco Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Exchange Traded has no effect on the direction of SPDR SP i.e., SPDR SP and Invesco Exchange go up and down completely randomly.
Pair Corralation between SPDR SP and Invesco Exchange
Considering the 90-day investment horizon SPDR SP MIDCAP is expected to under-perform the Invesco Exchange. In addition to that, SPDR SP is 1.03 times more volatile than Invesco Exchange Traded. It trades about -0.16 of its total potential returns per unit of risk. Invesco Exchange Traded is currently generating about -0.16 per unit of volatility. If you would invest 3,064 in Invesco Exchange Traded on December 6, 2024 and sell it today you would lose (279.00) from holding Invesco Exchange Traded or give up 9.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP MIDCAP vs. Invesco Exchange Traded
Performance |
| Timeline |
| SPDR SP MIDCAP |
| Invesco Exchange Traded |
SPDR SP and Invesco Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Invesco Exchange
The main advantage of trading using opposite SPDR SP and Invesco Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Invesco Exchange 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 Exchange will offset losses from the drop in Invesco Exchange's long position.| SPDR SP vs. iShares Core SP | ||
| SPDR SP vs. iShares Russell 2000 | ||
| SPDR SP vs. iShares MSCI EAFE | ||
| SPDR SP vs. iShares Russell 2000 |
| Invesco Exchange vs. Invesco Exchange Traded | ||
| Invesco Exchange vs. Invesco Exchange Traded | ||
| Invesco Exchange vs. Invesco SP SmallCap | ||
| Invesco Exchange vs. Invesco SP 500 |
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.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Positions Ratings 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 | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |