Correlation Between SPDR Portfolio and Invesco SP
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio 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 Portfolio 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 Portfolio SP and Invesco SP 500, you can compare the effects of market volatilities on SPDR Portfolio 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 Portfolio with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Invesco SP.
Diversification Opportunities for SPDR Portfolio and Invesco SP
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and SPDR Portfolio 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 Portfolio SP 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 500 has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Invesco SP go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Invesco SP
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.87 times less return on investment than Invesco SP. But when comparing it to its historical volatility, SPDR Portfolio SP is 1.61 times less risky than Invesco SP. It trades about 0.24 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 8,962 in Invesco SP 500 on August 29, 2024 and sell it today you would earn a total of 683.00 from holding Invesco SP 500 or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. Invesco SP 500
Performance |
| Timeline |
| SPDR Portfolio SP |
| Invesco SP 500 |
SPDR Portfolio and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Invesco SP
The main advantage of trading using opposite SPDR Portfolio and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio 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 Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR SP 600 |
| Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP SmallCap | Invesco SP vs. Invesco SP MidCap | Invesco SP vs. Invesco SP MidCap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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