Correlation Between Invesco High and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Invesco High and SPDR SP 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 High and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco High Yield and SPDR SP 400, you can compare the effects of market volatilities on Invesco High and SPDR SP 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 High with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and SPDR SP.
Diversification Opportunities for Invesco High and SPDR SP
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and SPDR SP 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 400 and Invesco High 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 High Yield are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 400 has no effect on the direction of Invesco High i.e., Invesco High and SPDR SP go up and down completely randomly.
Pair Corralation between Invesco High and SPDR SP
Considering the 90-day investment horizon Invesco High is expected to generate 1.06 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Invesco High Yield is 1.04 times less risky than SPDR SP. It trades about 0.07 of its potential returns per unit of risk. SPDR SP 400 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,699 in SPDR SP 400 on August 28, 2024 and sell it today you would earn a total of 2,018 from holding SPDR SP 400 or generate 30.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco High Yield vs. SPDR SP 400
Performance |
| Timeline |
| Invesco High Yield |
| SPDR SP 400 |
Invesco High and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco High and SPDR SP
The main advantage of trading using opposite Invesco High and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| Invesco High vs. Invesco Dividend Achievers | Invesco High vs. Invesco International Dividend | Invesco High vs. First Trust Morningstar | Invesco High vs. WisdomTree High Dividend |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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