Correlation Between Invesco SP and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco SP and First Trust 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 SP and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SP 500 and First Trust S Network, you can compare the effects of market volatilities on Invesco SP and First Trust 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 SP with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and First Trust.
Diversification Opportunities for Invesco SP and First Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and First Trust S Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust S and Invesco SP 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 SP 500 are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust S has no effect on the direction of Invesco SP i.e., Invesco SP and First Trust go up and down completely randomly.
Pair Corralation between Invesco SP and First Trust
Considering the 90-day investment horizon Invesco SP 500 is expected to generate 1.14 times more return on investment than First Trust. However, Invesco SP is 1.14 times more volatile than First Trust S Network. It trades about 0.28 of its potential returns per unit of risk. First Trust S Network is currently generating about 0.24 per unit of risk. If you would invest 5,201 in Invesco SP 500 on August 30, 2024 and sell it today you would earn a total of 308.00 from holding Invesco SP 500 or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Invesco SP 500 vs. First Trust S Network
Performance |
| Timeline |
| Invesco SP 500 |
| First Trust S |
Invesco SP and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and First Trust
The main advantage of trading using opposite Invesco SP and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco SP vs. Consumer Discretionary Select | Invesco SP vs. Vanguard Consumer Discretionary | Invesco SP vs. iShares Home Construction | Invesco SP vs. Fidelity MSCI Consumer |
| First Trust vs. Ember Therapeutics | First Trust vs. Leone Asset Management | First Trust vs. Opus Magnum Ameris |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |