Correlation Between SPDR ICE and Invesco Fundamental
Can any of the company-specific risk be diversified away by investing in both SPDR ICE and Invesco Fundamental 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 SPDR ICE and Invesco Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR ICE Preferred and Invesco Fundamental High, you can compare the effects of market volatilities on SPDR ICE and Invesco Fundamental 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 SPDR ICE with a short position of Invesco Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR ICE and Invesco Fundamental.
Diversification Opportunities for SPDR ICE and Invesco Fundamental
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Invesco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SPDR ICE Preferred and Invesco Fundamental High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Fundamental High and SPDR ICE 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 SPDR ICE Preferred are associated (or correlated) with Invesco Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Fundamental High has no effect on the direction of SPDR ICE i.e., SPDR ICE and Invesco Fundamental go up and down completely randomly.
Pair Corralation between SPDR ICE and Invesco Fundamental
Considering the 90-day investment horizon SPDR ICE Preferred is expected to under-perform the Invesco Fundamental. In addition to that, SPDR ICE is 2.3 times more volatile than Invesco Fundamental High. It trades about -0.09 of its total potential returns per unit of risk. Invesco Fundamental High is currently generating about 0.08 per unit of volatility. If you would invest 1,818 in Invesco Fundamental High on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Invesco Fundamental High or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR ICE Preferred vs. Invesco Fundamental High
Performance |
| Timeline |
| SPDR ICE Preferred |
| Invesco Fundamental High |
SPDR ICE and Invesco Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR ICE and Invesco Fundamental
The main advantage of trading using opposite SPDR ICE and Invesco Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR ICE position performs unexpectedly, Invesco Fundamental 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 Invesco Fundamental will offset losses from the drop in Invesco Fundamental's long position.| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
| Invesco Fundamental vs. Invesco Emerging Markets | Invesco Fundamental vs. Invesco National AMT Free | Invesco Fundamental vs. PIMCO 0 5 Year | Invesco Fundamental vs. SPDR Bloomberg High |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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