Correlation Between Invesco Fundamental and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both Invesco Fundamental 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 Fundamental 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 Fundamental High and SPDR ICE Preferred, you can compare the effects of market volatilities on Invesco Fundamental 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 Fundamental with a short position of SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Fundamental and SPDR ICE.
Diversification Opportunities for Invesco Fundamental and SPDR ICE
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and SPDR is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Fundamental High 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 Fundamental 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 Fundamental High 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 Fundamental i.e., Invesco Fundamental and SPDR ICE go up and down completely randomly.
Pair Corralation between Invesco Fundamental and SPDR ICE
Considering the 90-day investment horizon Invesco Fundamental High is expected to generate 0.4 times more return on investment than SPDR ICE. However, Invesco Fundamental High is 2.48 times less risky than SPDR ICE. It trades about 0.24 of its potential returns per unit of risk. SPDR ICE Preferred is currently generating about 0.0 per unit of risk. If you would invest 1,811 in Invesco Fundamental High on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Invesco Fundamental High or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco Fundamental High vs. SPDR ICE Preferred
Performance |
| Timeline |
| Invesco Fundamental High |
| SPDR ICE Preferred |
Invesco Fundamental and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Fundamental and SPDR ICE
The main advantage of trading using opposite Invesco Fundamental and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Fundamental 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.The idea behind Invesco Fundamental High and SPDR ICE Preferred pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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