Correlation Between SPDR SP and Invesco
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Invesco 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 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, you can compare the effects of market volatilities on SPDR SP and Invesco 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Invesco.
Diversification Opportunities for SPDR SP and Invesco
Very poor diversification
The 3 months correlation between SPDR and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of SPDR SP i.e., SPDR SP and Invesco go up and down completely randomly.
Pair Corralation between SPDR SP and Invesco
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 0.88 times more return on investment than Invesco. However, SPDR SP 500 is 1.14 times less risky than Invesco. It trades about 0.11 of its potential returns per unit of risk. Invesco is currently generating about 0.08 per unit of risk. If you would invest 38,489 in SPDR SP 500 on August 29, 2024 and sell it today you would earn a total of 21,576 from holding SPDR SP 500 or generate 56.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.52% |
| Values | Daily Returns |
SPDR SP 500 vs. Invesco
Performance |
| Timeline |
| SPDR SP 500 |
| Invesco |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR SP and Invesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Invesco
The main advantage of trading using opposite SPDR SP and Invesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Invesco 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 will offset losses from the drop in Invesco's 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 |
| Invesco vs. Vanguard Mid Cap Index | Invesco vs. iShares Core SP | Invesco vs. SPDR SP MIDCAP | Invesco vs. Vanguard SP Mid Cap |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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