Correlation Between Invesco SP and ProShares Smart
Can any of the company-specific risk be diversified away by investing in both Invesco SP and ProShares Smart 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 ProShares Smart 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 ProShares Smart Materials, you can compare the effects of market volatilities on Invesco SP and ProShares Smart 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 ProShares Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and ProShares Smart.
Diversification Opportunities for Invesco SP and ProShares Smart
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and ProShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and ProShares Smart Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Smart Materials 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 ProShares Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Smart Materials has no effect on the direction of Invesco SP i.e., Invesco SP and ProShares Smart go up and down completely randomly.
Pair Corralation between Invesco SP and ProShares Smart
Considering the 90-day investment horizon Invesco SP 500 is expected to under-perform the ProShares Smart. In addition to that, Invesco SP is 21.03 times more volatile than ProShares Smart Materials. It trades about -0.21 of its total potential returns per unit of risk. ProShares Smart Materials is currently generating about -0.17 per unit of volatility. If you would invest 3,189 in ProShares Smart Materials on September 12, 2024 and sell it today you would lose (93.00) from holding ProShares Smart Materials or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SP 500 vs. ProShares Smart Materials
Performance |
| Timeline |
| Invesco SP 500 |
| ProShares Smart Materials |
Invesco SP and ProShares Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and ProShares Smart
The main advantage of trading using opposite Invesco SP and ProShares Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, ProShares Smart 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 ProShares Smart will offset losses from the drop in ProShares Smart's long position.| Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP 500 | Invesco SP vs. Aquagold International | Invesco SP vs. Morningstar Unconstrained Allocation |
| ProShares Smart vs. Invesco SP 500 | ProShares Smart vs. Invesco SP 500 | ProShares Smart vs. Invesco SP 500 | ProShares Smart vs. Aquagold International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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