Correlation Between SPDR SP and Invesco BulletShares
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Invesco BulletShares 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 BulletShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and Invesco BulletShares 2030, you can compare the effects of market volatilities on SPDR SP and Invesco BulletShares 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 BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Invesco BulletShares.
Diversification Opportunities for SPDR SP and Invesco BulletShares
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Invesco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Invesco BulletShares 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2030 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 500 are associated (or correlated) with Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2030 has no effect on the direction of SPDR SP i.e., SPDR SP and Invesco BulletShares go up and down completely randomly.
Pair Corralation between SPDR SP and Invesco BulletShares
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 2.35 times more return on investment than Invesco BulletShares. However, SPDR SP is 2.35 times more volatile than Invesco BulletShares 2030. It trades about 0.15 of its potential returns per unit of risk. Invesco BulletShares 2030 is currently generating about 0.08 per unit of risk. If you would invest 45,031 in SPDR SP 500 on August 26, 2024 and sell it today you would earn a total of 14,520 from holding SPDR SP 500 or generate 32.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Invesco BulletShares 2030
Performance |
| Timeline |
| SPDR SP 500 |
| Invesco BulletShares 2030 |
SPDR SP and Invesco BulletShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Invesco BulletShares
The main advantage of trading using opposite SPDR SP and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Invesco BulletShares 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 BulletShares will offset losses from the drop in Invesco BulletShares' long position.| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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