Correlation Between Invesco SP and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both Invesco SP and IShares Consumer 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 IShares Consumer 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 iShares Consumer Staples, you can compare the effects of market volatilities on Invesco SP and IShares Consumer 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 IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and IShares Consumer.
Diversification Opportunities for Invesco SP and IShares Consumer
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and iShares Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Staples 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 IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Staples has no effect on the direction of Invesco SP i.e., Invesco SP and IShares Consumer go up and down completely randomly.
Pair Corralation between Invesco SP and IShares Consumer
Considering the 90-day investment horizon Invesco SP 500 is expected to under-perform the IShares Consumer. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP 500 is 1.01 times less risky than IShares Consumer. The etf trades about -0.23 of its potential returns per unit of risk. The iShares Consumer Staples is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 6,963 in iShares Consumer Staples on August 24, 2024 and sell it today you would lose (23.00) from holding iShares Consumer Staples or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SP 500 vs. iShares Consumer Staples
Performance |
| Timeline |
| Invesco SP 500 |
| iShares Consumer Staples |
Invesco SP and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and IShares Consumer
The main advantage of trading using opposite Invesco SP and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, IShares Consumer 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 IShares Consumer will offset losses from the drop in IShares Consumer's long position.| Invesco SP vs. iShares Consumer Discretionary | Invesco SP vs. iShares Industrials ETF | Invesco SP vs. iShares Utilities ETF | Invesco SP vs. iShares Basic Materials |
| IShares Consumer vs. iShares Consumer Discretionary | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Utilities ETF | IShares Consumer vs. iShares Basic Materials |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |