Correlation Between SPDR Dow and Invesco DB
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and Invesco DB 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 SPDR Dow and Invesco DB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and Invesco DB Energy, you can compare the effects of market volatilities on SPDR Dow and Invesco DB 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 SPDR Dow with a short position of Invesco DB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and Invesco DB.
Diversification Opportunities for SPDR Dow and Invesco DB
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Invesco is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and Invesco DB Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DB Energy and SPDR Dow 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 SPDR Dow Jones are associated (or correlated) with Invesco DB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DB Energy has no effect on the direction of SPDR Dow i.e., SPDR Dow and Invesco DB go up and down completely randomly.
Pair Corralation between SPDR Dow and Invesco DB
Considering the 90-day investment horizon SPDR Dow Jones is expected to generate 0.79 times more return on investment than Invesco DB. However, SPDR Dow Jones is 1.26 times less risky than Invesco DB. It trades about 0.06 of its potential returns per unit of risk. Invesco DB Energy is currently generating about 0.01 per unit of risk. If you would invest 8,743 in SPDR Dow Jones on August 28, 2024 and sell it today you would earn a total of 2,010 from holding SPDR Dow Jones or generate 22.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. Invesco DB Energy
Performance |
| Timeline |
| SPDR Dow Jones |
| Invesco DB Energy |
SPDR Dow and Invesco DB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and Invesco DB
The main advantage of trading using opposite SPDR Dow and Invesco DB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, Invesco DB 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 Invesco DB will offset losses from the drop in Invesco DB's long position.| SPDR Dow vs. iShares Cohen Steers | SPDR Dow vs. iShares Real Estate | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. iShares Utilities ETF |
| Invesco DB vs. Invesco DB Precious | Invesco DB vs. Invesco DB Base | Invesco DB vs. Invesco DB Oil | Invesco DB vs. Invesco DB Agriculture |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |