Correlation Between Invesco DWA and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Invesco DWA and IShares MSCI 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 DWA and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DWA Momentum and iShares MSCI Intl, you can compare the effects of market volatilities on Invesco DWA and IShares MSCI 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 DWA with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and IShares MSCI.
Diversification Opportunities for Invesco DWA and IShares MSCI
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and IShares is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Momentum and iShares MSCI Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Intl and Invesco DWA 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 DWA Momentum are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Intl has no effect on the direction of Invesco DWA i.e., Invesco DWA and IShares MSCI go up and down completely randomly.
Pair Corralation between Invesco DWA and IShares MSCI
Considering the 90-day investment horizon Invesco DWA Momentum is expected to generate 1.74 times more return on investment than IShares MSCI. However, Invesco DWA is 1.74 times more volatile than iShares MSCI Intl. It trades about 0.35 of its potential returns per unit of risk. iShares MSCI Intl is currently generating about -0.13 per unit of risk. If you would invest 10,562 in Invesco DWA Momentum on August 27, 2024 and sell it today you would earn a total of 1,013 from holding Invesco DWA Momentum or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco DWA Momentum vs. iShares MSCI Intl
Performance |
| Timeline |
| Invesco DWA Momentum |
| iShares MSCI Intl |
Invesco DWA and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DWA and IShares MSCI
The main advantage of trading using opposite Invesco DWA and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DWA position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Invesco DWA vs. Invesco DWA Developed | Invesco DWA vs. Invesco DWA Emerging | Invesco DWA vs. Invesco DWA SmallCap | Invesco DWA vs. First Trust Dorsey |
| IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares MSCI Intl |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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