Correlation Between Invesco Aerospace and IShares Industrials
Can any of the company-specific risk be diversified away by investing in both Invesco Aerospace and IShares Industrials 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 Aerospace and IShares Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Aerospace Defense and iShares Industrials ETF, you can compare the effects of market volatilities on Invesco Aerospace and IShares Industrials 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 Aerospace with a short position of IShares Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Aerospace and IShares Industrials.
Diversification Opportunities for Invesco Aerospace and IShares Industrials
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Aerospace Defense and iShares Industrials ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Industrials ETF and Invesco Aerospace 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 Aerospace Defense are associated (or correlated) with IShares Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Industrials ETF has no effect on the direction of Invesco Aerospace i.e., Invesco Aerospace and IShares Industrials go up and down completely randomly.
Pair Corralation between Invesco Aerospace and IShares Industrials
Considering the 90-day investment horizon Invesco Aerospace is expected to generate 1.22 times less return on investment than IShares Industrials. In addition to that, Invesco Aerospace is 1.23 times more volatile than iShares Industrials ETF. It trades about 0.15 of its total potential returns per unit of risk. iShares Industrials ETF is currently generating about 0.23 per unit of volatility. If you would invest 12,732 in iShares Industrials ETF on September 3, 2024 and sell it today you would earn a total of 1,661 from holding iShares Industrials ETF or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Aerospace Defense vs. iShares Industrials ETF
Performance |
| Timeline |
| Invesco Aerospace Defense |
| iShares Industrials ETF |
Invesco Aerospace and IShares Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Aerospace and IShares Industrials
The main advantage of trading using opposite Invesco Aerospace and IShares Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Aerospace position performs unexpectedly, IShares Industrials 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 Industrials will offset losses from the drop in IShares Industrials' long position.| Invesco Aerospace vs. Industrial Select Sector | Invesco Aerospace vs. Driven Brands Holdings | Invesco Aerospace vs. iShares Aerospace Defense | Invesco Aerospace vs. Vanguard Industrials Index |
| IShares Industrials vs. iShares Consumer Discretionary | IShares Industrials vs. iShares Consumer Staples | IShares Industrials vs. iShares Basic Materials | IShares Industrials vs. iShares Utilities ETF |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |