Correlation Between SPDR SP and Invesco SP
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Invesco SP 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 SP and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 600 and Invesco SP SmallCap, you can compare the effects of market volatilities on SPDR SP and Invesco SP 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 SP with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Invesco SP.
Diversification Opportunities for SPDR SP and Invesco SP
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and Invesco is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 600 and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap and SPDR 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 SPDR SP 600 are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP SmallCap has no effect on the direction of SPDR SP i.e., SPDR SP and Invesco SP go up and down completely randomly.
Pair Corralation between SPDR SP and Invesco SP
Given the investment horizon of 90 days SPDR SP 600 is expected to generate 1.55 times more return on investment than Invesco SP. However, SPDR SP is 1.55 times more volatile than Invesco SP SmallCap. It trades about 0.3 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about 0.3 per unit of risk. If you would invest 8,532 in SPDR SP 600 on September 1, 2024 and sell it today you would earn a total of 912.00 from holding SPDR SP 600 or generate 10.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 600 vs. Invesco SP SmallCap
Performance |
| Timeline |
| SPDR SP 600 |
| Invesco SP SmallCap |
SPDR SP and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Invesco SP
The main advantage of trading using opposite SPDR SP and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Invesco SP 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 SP will offset losses from the drop in Invesco SP's long position.| SPDR SP vs. Dimensional ETF Trust | SPDR SP vs. Vanguard Small Cap Index | SPDR SP vs. First Trust Multi Manager | SPDR SP vs. Vanguard SP Small Cap |
| Invesco SP vs. Vanguard Small Cap Value | Invesco SP vs. Dimensional Targeted Value | Invesco SP vs. iShares SP Small Cap | Invesco SP vs. SPDR SP 600 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |