Correlation Between Invesco Dynamic and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both Invesco Dynamic and SPDR Kensho 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 Dynamic and SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Dynamic Large and SPDR Kensho Future, you can compare the effects of market volatilities on Invesco Dynamic and SPDR Kensho 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 Dynamic with a short position of SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Dynamic and SPDR Kensho.
Diversification Opportunities for Invesco Dynamic and SPDR Kensho
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and SPDR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Large and SPDR Kensho Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Future and Invesco Dynamic 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 Dynamic Large are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Future has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and SPDR Kensho go up and down completely randomly.
Pair Corralation between Invesco Dynamic and SPDR Kensho
Considering the 90-day investment horizon Invesco Dynamic Large is expected to generate 0.87 times more return on investment than SPDR Kensho. However, Invesco Dynamic Large is 1.15 times less risky than SPDR Kensho. It trades about 0.12 of its potential returns per unit of risk. SPDR Kensho Future is currently generating about 0.09 per unit of risk. If you would invest 6,155 in Invesco Dynamic Large on August 27, 2024 and sell it today you would earn a total of 4,331 from holding Invesco Dynamic Large or generate 70.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Dynamic Large vs. SPDR Kensho Future
Performance |
| Timeline |
| Invesco Dynamic Large |
| SPDR Kensho Future |
Invesco Dynamic and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Dynamic and SPDR Kensho
The main advantage of trading using opposite Invesco Dynamic and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Dynamic position performs unexpectedly, SPDR Kensho 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 Kensho will offset losses from the drop in SPDR Kensho's long position.The idea behind Invesco Dynamic Large and SPDR Kensho Future pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SPDR Kensho vs. SPDR STOXX Europe | SPDR Kensho vs. SPDR Bloomberg Barclays | SPDR Kensho vs. SPDR Kensho Intelligent | SPDR Kensho vs. SPDR SP Kensho |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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