Correlation Between Invesco SP and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Invesco SP and Sparta Capital 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 Sparta Capital 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 Sparta Capital, you can compare the effects of market volatilities on Invesco SP and Sparta Capital 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 Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Sparta Capital.
Diversification Opportunities for Invesco SP and Sparta Capital
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and Sparta is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital 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 Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Invesco SP i.e., Invesco SP and Sparta Capital go up and down completely randomly.
Pair Corralation between Invesco SP and Sparta Capital
Considering the 90-day investment horizon Invesco SP 500 is expected to generate 0.13 times more return on investment than Sparta Capital. However, Invesco SP 500 is 7.5 times less risky than Sparta Capital. It trades about -0.16 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.22 per unit of risk. If you would invest 5,453 in Invesco SP 500 on September 13, 2024 and sell it today you would lose (132.00) from holding Invesco SP 500 or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco SP 500 vs. Sparta Capital
Performance |
| Timeline |
| Invesco SP 500 |
| Sparta Capital |
Invesco SP and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and Sparta Capital
The main advantage of trading using opposite Invesco SP and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| Invesco SP vs. Invesco DWA Utilities | Invesco SP vs. Invesco Dynamic Food | Invesco SP vs. SCOR PK | Invesco SP vs. Morningstar Unconstrained Allocation |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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