Correlation Between Invesco DWA and ETF Series
Can any of the company-specific risk be diversified away by investing in both Invesco DWA and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Invesco DWA and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and ETF Series.
Diversification Opportunities for Invesco DWA and ETF Series
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and ETF is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Utilities and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Invesco DWA i.e., Invesco DWA and ETF Series go up and down completely randomly.
Pair Corralation between Invesco DWA and ETF Series
Considering the 90-day investment horizon Invesco DWA Utilities is expected to under-perform the ETF Series. But the etf apears to be less risky and, when comparing its historical volatility, Invesco DWA Utilities is 1.26 times less risky than ETF Series. The etf trades about -0.14 of its potential returns per unit of risk. The ETF Series Solutions is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,858 in ETF Series Solutions on September 12, 2024 and sell it today you would earn a total of 149.00 from holding ETF Series Solutions or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco DWA Utilities vs. ETF Series Solutions
Performance |
| Timeline |
| Invesco DWA Utilities |
| ETF Series Solutions |
Invesco DWA and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DWA and ETF Series
The main advantage of trading using opposite Invesco DWA and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DWA position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Basic | Invesco DWA vs. Invesco Dynamic Large | Invesco DWA vs. Aquagold International |
| ETF Series vs. Invesco DWA Utilities | ETF Series vs. Invesco Dynamic Large | ETF Series vs. SCOR PK | ETF Series vs. Morningstar Unconstrained Allocation |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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