Correlation Between Invesco DWA and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Invesco DWA and SPDR Galaxy 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 SPDR Galaxy 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 SPDR Galaxy Transformative, you can compare the effects of market volatilities on Invesco DWA and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and SPDR Galaxy.
Diversification Opportunities for Invesco DWA and SPDR Galaxy
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Invesco and SPDR is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Utilities and SPDR Galaxy Transformative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Transfor 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Transfor has no effect on the direction of Invesco DWA i.e., Invesco DWA and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Invesco DWA and SPDR Galaxy
Considering the 90-day investment horizon Invesco DWA is expected to generate 8.18 times less return on investment than SPDR Galaxy. But when comparing it to its historical volatility, Invesco DWA Utilities is 2.3 times less risky than SPDR Galaxy. It trades about 0.08 of its potential returns per unit of risk. SPDR Galaxy Transformative is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,516 in SPDR Galaxy Transformative on August 26, 2024 and sell it today you would earn a total of 943.00 from holding SPDR Galaxy Transformative or generate 37.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 13.96% |
| Values | Daily Returns |
Invesco DWA Utilities vs. SPDR Galaxy Transformative
Performance |
| Timeline |
| Invesco DWA Utilities |
| SPDR Galaxy Transfor |
Invesco DWA and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DWA and SPDR Galaxy
The main advantage of trading using opposite Invesco DWA and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DWA position performs unexpectedly, SPDR Galaxy 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 Galaxy will offset losses from the drop in SPDR Galaxy's long position.| Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Basic | Invesco DWA vs. Invesco Dynamic Large |
| SPDR Galaxy vs. Invesco DWA Utilities | SPDR Galaxy vs. Invesco Dynamic Large | SPDR Galaxy vs. Invesco Dynamic Large | SPDR Galaxy vs. HUMANA INC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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