Correlation Between Invesco SP and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Invesco SP and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio Aggregate, you can compare the effects of market volatilities on Invesco SP and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and SPDR Portfolio.
Diversification Opportunities for Invesco SP and SPDR Portfolio
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and SPDR is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and SPDR Portfolio Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Aggregate 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Aggregate has no effect on the direction of Invesco SP i.e., Invesco SP and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Invesco SP and SPDR Portfolio
Considering the 90-day investment horizon Invesco SP 500 is expected to under-perform the SPDR Portfolio. In addition to that, Invesco SP is 2.31 times more volatile than SPDR Portfolio Aggregate. It trades about -0.01 of its total potential returns per unit of risk. SPDR Portfolio Aggregate is currently generating about 0.27 per unit of volatility. If you would invest 2,515 in SPDR Portfolio Aggregate on September 13, 2024 and sell it today you would earn a total of 38.00 from holding SPDR Portfolio Aggregate or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco SP 500 vs. SPDR Portfolio Aggregate
Performance |
| Timeline |
| Invesco SP 500 |
| SPDR Portfolio Aggregate |
Invesco SP and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and SPDR Portfolio
The main advantage of trading using opposite Invesco SP and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.| Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP SmallCap | Invesco SP vs. Invesco SP MidCap | Invesco SP vs. Invesco SP MidCap |
| SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Barclays Intermediate | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio Emerging |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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