Correlation Between Invesco Active and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Invesco Active and SPDR Dow 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 Active and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Active Real and SPDR Dow Jones, you can compare the effects of market volatilities on Invesco Active and SPDR Dow 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 Active with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Active and SPDR Dow.
Diversification Opportunities for Invesco Active and SPDR Dow
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and SPDR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Active Real and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and Invesco Active 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 Active Real are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Invesco Active i.e., Invesco Active and SPDR Dow go up and down completely randomly.
Pair Corralation between Invesco Active and SPDR Dow
Considering the 90-day investment horizon Invesco Active Real is expected to under-perform the SPDR Dow. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Active Real is 1.05 times less risky than SPDR Dow. The etf trades about -0.02 of its potential returns per unit of risk. The SPDR Dow Jones is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,587 in SPDR Dow Jones on August 25, 2024 and sell it today you would earn a total of 25.00 from holding SPDR Dow Jones or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Invesco Active Real vs. SPDR Dow Jones
Performance |
| Timeline |
| Invesco Active Real |
| SPDR Dow Jones |
Invesco Active and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Active and SPDR Dow
The main advantage of trading using opposite Invesco Active and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Active position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow's long position.| Invesco Active vs. First Trust SP | Invesco Active vs. iShares Residential and | Invesco Active vs. IQ Real Estate | Invesco Active vs. Nuveen Short Term REIT |
| SPDR Dow vs. iShares Cohen Steers | SPDR Dow vs. iShares Real Estate | SPDR Dow vs. SPDR Dow Jones | SPDR Dow 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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