Correlation Between Invesco DWA and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both Invesco DWA and IShares Consumer 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 DWA and IShares Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DWA Consumer and iShares Consumer Staples, you can compare the effects of market volatilities on Invesco DWA and IShares Consumer 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 DWA with a short position of IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and IShares Consumer.
Diversification Opportunities for Invesco DWA and IShares Consumer
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and IShares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Consumer and iShares Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Staples and Invesco DWA 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 DWA Consumer are associated (or correlated) with IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Staples has no effect on the direction of Invesco DWA i.e., Invesco DWA and IShares Consumer go up and down completely randomly.
Pair Corralation between Invesco DWA and IShares Consumer
Considering the 90-day investment horizon Invesco DWA Consumer is expected to generate 1.22 times more return on investment than IShares Consumer. However, Invesco DWA is 1.22 times more volatile than iShares Consumer Staples. It trades about 0.1 of its potential returns per unit of risk. iShares Consumer Staples is currently generating about 0.06 per unit of risk. If you would invest 8,518 in Invesco DWA Consumer on August 27, 2024 and sell it today you would earn a total of 2,378 from holding Invesco DWA Consumer or generate 27.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco DWA Consumer vs. iShares Consumer Staples
Performance |
| Timeline |
| Invesco DWA Consumer |
| iShares Consumer Staples |
Invesco DWA and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DWA and IShares Consumer
The main advantage of trading using opposite Invesco DWA and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DWA position performs unexpectedly, IShares Consumer 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 Consumer will offset losses from the drop in IShares Consumer's long position.| Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Basic | Invesco DWA vs. Invesco DWA Industrials | Invesco DWA vs. Invesco DWA Utilities |
| IShares Consumer vs. Vanguard Consumer Discretionary | IShares Consumer vs. Vanguard Utilities Index | IShares Consumer vs. Vanguard Industrials Index | IShares Consumer vs. Vanguard Materials Index |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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