Correlation Between Invesco SP and Health Care
Can any of the company-specific risk be diversified away by investing in both Invesco SP and Health Care 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 Health Care 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 Health Care Select, you can compare the effects of market volatilities on Invesco SP and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Health Care.
Diversification Opportunities for Invesco SP and Health Care
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Health is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Invesco SP i.e., Invesco SP and Health Care go up and down completely randomly.
Pair Corralation between Invesco SP and Health Care
Given the investment horizon of 90 days Invesco SP 500 is expected to generate 1.07 times more return on investment than Health Care. However, Invesco SP is 1.07 times more volatile than Health Care Select. It trades about 0.03 of its potential returns per unit of risk. Health Care Select is currently generating about 0.03 per unit of risk. If you would invest 3,030 in Invesco SP 500 on September 1, 2024 and sell it today you would earn a total of 92.00 from holding Invesco SP 500 or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Invesco SP 500 vs. Health Care Select
Performance |
| Timeline |
| Invesco SP 500 |
| Health Care Select |
Invesco SP and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and Health Care
The main advantage of trading using opposite Invesco SP and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Invesco SP vs. First Trust Exchange Traded | Invesco SP vs. Ultimus Managers Trust | Invesco SP vs. Horizon Kinetics Medical | Invesco SP vs. Harbor Health Care |
| Health Care vs. Consumer Staples Select | Health Care vs. Industrial Select Sector | Health Care vs. Consumer Discretionary Select | Health Care vs. Utilities Select Sector |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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