Correlation Between Invesco DWA and ProShares
Can any of the company-specific risk be diversified away by investing in both Invesco DWA and ProShares 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 ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DWA Utilities and ProShares SP Technology, you can compare the effects of market volatilities on Invesco DWA and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and ProShares.
Diversification Opportunities for Invesco DWA and ProShares
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and ProShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Utilities and ProShares SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Technology 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 Utilities are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP Technology has no effect on the direction of Invesco DWA i.e., Invesco DWA and ProShares go up and down completely randomly.
Pair Corralation between Invesco DWA and ProShares
Considering the 90-day investment horizon Invesco DWA is expected to generate 1.26 times less return on investment than ProShares. But when comparing it to its historical volatility, Invesco DWA Utilities is 1.11 times less risky than ProShares. It trades about 0.06 of its potential returns per unit of risk. ProShares SP Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,617 in ProShares SP Technology on August 30, 2024 and sell it today you would earn a total of 2,105 from holding ProShares SP Technology or generate 37.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco DWA Utilities vs. ProShares SP Technology
Performance |
| Timeline |
| Invesco DWA Utilities |
| ProShares SP Technology |
Invesco DWA and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DWA and ProShares
The main advantage of trading using opposite Invesco DWA and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DWA position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.| Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Basic | Invesco DWA vs. Invesco Dynamic Large |
| ProShares vs. Nexalin Technology | ProShares vs. Kilroy Realty Corp | ProShares vs. Highwoods Properties | ProShares vs. Karat Packaging |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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