Correlation Between Invesco Markets and SP 500
Can any of the company-specific risk be diversified away by investing in both Invesco Markets and SP 500 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 Invesco Markets and SP 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Markets II and SP 500 VIX, you can compare the effects of market volatilities on Invesco Markets and SP 500 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 Invesco Markets with a short position of SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Markets and SP 500.
Diversification Opportunities for Invesco Markets and SP 500
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and VILX is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Markets II and SP 500 VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 VIX and Invesco Markets 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 Invesco Markets II are associated (or correlated) with SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 VIX has no effect on the direction of Invesco Markets i.e., Invesco Markets and SP 500 go up and down completely randomly.
Pair Corralation between Invesco Markets and SP 500
Assuming the 90 days trading horizon Invesco Markets is expected to generate 10.8 times less return on investment than SP 500. But when comparing it to its historical volatility, Invesco Markets II is 19.7 times less risky than SP 500. It trades about 0.06 of its potential returns per unit of risk. SP 500 VIX is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,445 in SP 500 VIX on October 14, 2024 and sell it today you would earn a total of 205,786 from holding SP 500 VIX or generate 5973.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Markets II vs. SP 500 VIX
Performance |
| Timeline |
| Invesco Markets II |
| SP 500 VIX |
Invesco Markets and SP 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Markets and SP 500
The main advantage of trading using opposite Invesco Markets and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Markets position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.| Invesco Markets vs. SP 500 VIX | Invesco Markets vs. WisdomTree Natural Gas | Invesco Markets vs. Leverage Shares 2x | Invesco Markets vs. WisdomTree Silver 3x |
| SP 500 vs. Vanguard FTSE Developed | SP 500 vs. Leverage Shares 2x | SP 500 vs. Amundi Index Solutions | SP 500 vs. Amundi Index Solutions |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |