Correlation Between Invesco Preferred and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both Invesco Preferred and SPDR ICE 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 Preferred and SPDR ICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Preferred ETF and SPDR ICE Preferred, you can compare the effects of market volatilities on Invesco Preferred and SPDR ICE 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 Preferred with a short position of SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Preferred and SPDR ICE.
Diversification Opportunities for Invesco Preferred and SPDR ICE
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Invesco and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Preferred ETF and SPDR ICE Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE Preferred and Invesco Preferred 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 Preferred ETF are associated (or correlated) with SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE Preferred has no effect on the direction of Invesco Preferred i.e., Invesco Preferred and SPDR ICE go up and down completely randomly.
Pair Corralation between Invesco Preferred and SPDR ICE
Considering the 90-day investment horizon Invesco Preferred ETF is expected to under-perform the SPDR ICE. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Preferred ETF is 1.01 times less risky than SPDR ICE. The etf trades about -0.04 of its potential returns per unit of risk. The SPDR ICE Preferred is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,356 in SPDR ICE Preferred on November 3, 2024 and sell it today you would lose (18.00) from holding SPDR ICE Preferred or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Preferred ETF vs. SPDR ICE Preferred
Performance |
| Timeline |
| Invesco Preferred ETF |
| SPDR ICE Preferred |
Invesco Preferred and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Preferred and SPDR ICE
The main advantage of trading using opposite Invesco Preferred and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Preferred position performs unexpectedly, SPDR ICE 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 ICE will offset losses from the drop in SPDR ICE's long position.| Invesco Preferred vs. Invesco Financial Preferred | Invesco Preferred vs. iShares Preferred and | Invesco Preferred vs. VanEck Preferred Securities | Invesco Preferred vs. SPDR ICE Preferred |
| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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