Correlation Between Invesco Emerging and SPDR FTSE
Can any of the company-specific risk be diversified away by investing in both Invesco Emerging and SPDR FTSE 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 Emerging and SPDR FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Emerging Markets and SPDR FTSE International, you can compare the effects of market volatilities on Invesco Emerging and SPDR FTSE 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 Emerging with a short position of SPDR FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Emerging and SPDR FTSE.
Diversification Opportunities for Invesco Emerging and SPDR FTSE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Emerging Markets and SPDR FTSE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FTSE International and Invesco Emerging 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 Emerging Markets are associated (or correlated) with SPDR FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FTSE International has no effect on the direction of Invesco Emerging i.e., Invesco Emerging and SPDR FTSE go up and down completely randomly.
Pair Corralation between Invesco Emerging and SPDR FTSE
Considering the 90-day investment horizon Invesco Emerging Markets is expected to generate 1.3 times more return on investment than SPDR FTSE. However, Invesco Emerging is 1.3 times more volatile than SPDR FTSE International. It trades about 0.01 of its potential returns per unit of risk. SPDR FTSE International is currently generating about -0.05 per unit of risk. If you would invest 2,068 in Invesco Emerging Markets on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Invesco Emerging Markets or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Invesco Emerging Markets vs. SPDR FTSE International
Performance |
| Timeline |
| Invesco Emerging Markets |
| SPDR FTSE International |
Invesco Emerging and SPDR FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Emerging and SPDR FTSE
The main advantage of trading using opposite Invesco Emerging and SPDR FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Emerging position performs unexpectedly, SPDR FTSE 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 SPDR FTSE will offset losses from the drop in SPDR FTSE's long position.| Invesco Emerging vs. iShares JP Morgan | Invesco Emerging vs. SPDR Bloomberg International | Invesco Emerging vs. VanEck JP Morgan | Invesco Emerging vs. Invesco Fundamental High |
| SPDR FTSE vs. SPDR Bloomberg Emerging | SPDR FTSE vs. Vanguard Emerging Markets | SPDR FTSE vs. SPDR Bloomberg Barclays | SPDR FTSE vs. VanEck JP Morgan |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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